When Donald Trump ran for president, he adopted a populist stance on taxes that he has utterly abandoned. Not only did he call for higher taxes on the rich, Trump claimed his own taxes would go up. In the lobby of Trump Tower, candidate Trump told reporters in the fall of 2015, “It’s going to cost me a fortune, which is actually true,”
Well, it wasn’t actually true.
Along with his unfulfilled promises to improve the health care system, and the nation’s infrastructure and immigration policies, Trump passed a tax law, with the help of Sen. Susan Collins, that didn’t do any of that. Instead, the law gave massive benefits to the wealthy and to large corporations.
In the 2018 tax year, 60 large corporations either paid nothing in federal taxes or got money back. As a report from the Institute on Taxation and Economic Policy (ITEP) found, these include companies representing the new and old economy. Amazon earned $11 billion in the U.S. while claiming a federal income tax rebate of $129 million. General Motors had $4.3 billion of income but had a federal tax rate of negative 2 percent.
What happened with corporate taxes resulted from how the Trump tax law was structured, and contrasted sharply to the 1986 strategy of Republican President Ronald Reagan and Democratic Speaker of the House Tip O’Neill. Reagan cut taxes in 1981 but then raised them after deficits soared. Reagan’s later, bipartisan approach emphasized simplifying the system and being fiscally responsible; it closed loopholes and cut rates, even expanding the Earned Income Tax Credit for low-income families.
Unfortunately, over the years corporate lobbyists and Congress brought back lots of loopholes, making the system more skewed toward the wealthy.
But after the Trump team and Republicans in Congress claimed they, too, would simplify the system — even promising that people would be able to do their taxes on a postcard — they abandoned their simplification pledge. As the ITEP report explained, “the new law cut the statutory tax rate to 21 percent [from 35 percent], while leaving intact most of the tax breaks that allowed profitable companies to zero out their income taxes.”
Nor have the claims by Trump tax supporters such as Collins that the tax changes would pay for themselves through a trickle-down mechanism panned out. With continued tax breaks and lower rates, federal budget deficits have soared.
All of what’s happened was not only utterly predictable, but was also not what the American people wanted.
The Trump tax bill started out unpopular and has continued to be so. And while the GOP hoped to campaign on the issue, by fall 2018 Republican candidates frequently avoided the issue altogether.
According to a recent poll from the Pew Research Center, only 36 percent of Americans approve of the Trump tax law. And, while Republicans’ approval is much higher than other groups’, GOP support has fallen. Between January 2018 and March 2019, Republicans’ support went from 75 percent to 71 percent, with strong approval falling sharply from 57 percent to 43 percent.
Moreover, Americans are rather unhappy with the tax system we have. Accorded to the Pew survey, 82 percent are bothered a lot (62 percent) or some (20 percent) by corporations not paying their fair share. Similar large percentages are bothered by the wealthy not paying a fair amount.
Unhappiness with economics and government operations go beyond taxes.
Americans — 63 percent of them — see the U.S. economic system as unfairly favoring powerful interests.
Citizens also want government to benefit the population in ways that support people’s needs and promote opportunity. When asked about government spending, most want increases for education, veterans’ benefits, infrastructure, Medicare, environmental protection, health care and scientific research.
With a Trump budget proposal that cuts the programs Americans strongly support and a tax law that decrease how much wealthy people and corporations pay, the claimed economic populism of candidate Trump has been laid bare as bereft of reality.