Category: Taxes

Fact-checking Trump’s Nashville speech

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The good news about President Donald Trump’s speech in Nashville last night was that he didn’t mention Roseanne Barr, which could have made that controversy much, much worse. The bad news? Try all of the false, misleading and dishonest claims he made.

“[There’s] never been an administration — and even some of our enemies are admitting it — that has done what we’ve done in the first year and a half. Think of it”

The tax law has been Trump’s only major legislative achievement, and he ranks behind other past presidents in bills signed into law.

“We’ve created 3.3 million new jobs since Election Day. If we would have said that before the election — I’m going to create 3.3 million new jobs — would never have [survived the] onslaught from fake news. Wouldn’t have accepted it, said no way you can do that”

While there have indeed been 3.3 million jobs created in the 18 months since Election Day 2016 (Nov. 2016-April 2018), there were 3.9 million jobs created in the 18 months before Election Day (May 2015-Oct. 2016) — when Trump was criticizing the state of the U.S. economy.

“Wages for the first time in many years are finally going up”

That is false; wages also increased during the final years of Obama’s presidency, per PolitiFact.

“[Nancy Pelosi] loves MS-13”

Pelosi was objecting to Trump calling undocumented immigrants “animals”; the White House says he was referring to MS-13 in his “animals” remarks. Pelosi never said she loved MS-13.

“So how do you like the fact they had people infiltrating our campaign? Can you imagine? Can you imagine?”

On Fox News last night, Rep. Trey Gowdy, R-S.C., said the FBI’s use of an informant for the 2016 Trump campaign was appropriate (see below for more).

“Mexico, I don’t want to cause a problem. But in the end, Mexico’s going to pay for the wall”

Mexico once again said it wasn’t paying for Trump’s wall. Here’s Mexican President Enrique Pena Nieto: “President @realDonaldTrump: NO. Mexico will NEVER pay for a wall. Not now, not ever. Sincerely, Mexico (all of us).”

“We passed largest tax cuts and reform in American history”

By either inflation-adjusted dollars or as a percentage of GDP, the tax legislation Trump signed into law last year ranks well below other tax laws, including those under Reagan or even Obama.

For an even more thorough account on Trump’s claims from last night, check out the feed from the Toronto Star’s Daniel Dale.

[NBC News]

Media

Ivanka Trump’s clothing company will be spared from tariffs, thanks to her dad

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The steel and aluminum industries in China will soon be slapped with tariffs up to $50 billion by President Donald Trump. On Thursday, after China announced their intentions to retaliate against the United States with $50 billion in tariffs of their own against U.S. goods, Trump warned that his administration would respond with another set of tariffs, this time targeting $100 billion worth of Chinese goods.

Exempt from the proposed tariffs against China, however, is the clothing manufacturing industry.

U.S. officials say they used an algorithm to determine which goods to exclude from new tariffs. According to the Washington Post, the list was drafted to achieve “the lowest consumer impact,” ensuring goods like clothing and toys were excluded so as not to raise the cost on domestic consumer goods.

Exempting clothing from the tariffs provides a big break to American clothing companies that hold trademarks in China. One of those clothing companies belongs to the First Daughter of the United States, Ivanka Trump.

A recent report by the Huffington Post found that the president’s daughter and closest adviser rakes in a total of $1.5 million a year from the Trump Organization while still working at the White House.

Her dual role as adviser to the president and private business executive has continuously raised ethical red flags. No one can be entirely sure that public policy by this administration isn’t being driven by business motives, or whether countries may pursue business deals with the Trump family as a means to curry political favor with the administration.

The clearest example of this ethical line-blurring comes from early in the Trump presidency, when Ivanka dined with Chinese President Xi Jinping at the Trump family’s resort in West Palm Beach on the same day China approved three new trademarks for Ivanka’s company.

[ThinkProgress]

Trump renews call for internet tax, making a veiled threat against Amazon

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President Donald Trump repeated an earlier call for an internet tax, in a thinly veiled shot at Amazon’s Jeff Bezos, who owns The Washington Post.

“The internet — they’re going to have to start paying sales tax because it’s very unfair what’s happening to our retailers all over the country that are put out of business,” Trump said Wednesday.

Trump also reiterated concerns about Amazon’s effect on the U.S. Postal Service as it struggles to keep up with online orders.

The comments mirror tweets from the president in December that named the e-commerce giant.

“There’s always been a fear for players like an Amazon or a Google that something like this could actually get through,” Daniel Ives, head of technology research at GBH Insights, told CNBC. “We believe it’s more noise than a real threat.”

There’s been speculation that the president’s shots at Amazon are aimed at Bezos, whose newspaper has published stories critical of the president.

Amazon already collects sales tax on products it sells directly to consumers, but has faced challenges from states over its policy of allowing third-party vendors to charge varying levels of sales tax.

In June South Carolina filed a complaint against the online retailer, and Amazon agreed in November to take on additional third-party tax burden in its home state of Washington.
The issue has garnered more attention as Amazon continues to take a bigger share of overall retail sales. Amazon celebrated its “biggest holiday” shopping season at the end of last year.

There is an underlying movement among traditional brick-and-mortar retailers to more heavily tax Amazon, Ives said, so the discussion is “something you have to keep an eye on.”

But the likelihood that an internet tax would pass is small, he said.
“Listen they’ve [Amazon] significantly changed the retail landscape across the world,” Ives said. “I think it’s more of the same where they’re getting in the crosshairs.”
Trump spoke before media and members of the administration Wednesday evening during the signing of the Interdict Act, which seeks to reduce drug smuggling through the purchase of opioid sensors.
Amazon did not immediately return a CNBC request for comment.

[CNBC]

Trump Falsely Claims GOP Tax Bill ‘Repealed Obamacare’

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The Republican tax-overhaul bill may have only ended the individual mandate aspect of Obamacare, but that won’t stop President Trump from gloating to his base that he “repealed” his predecessor’s signature legislation. “When the individual mandate is being repealed, that means Obamacare is being repealed,” the president told the press during a cabinet meeting. “Obamacare has been repealed in this bill.”

Contrary to his claim, however, the Affordable Care Act is still largely intact—from its Medicaid expansion to the insurance exchanges it set up to regulations on insurance companies, including those mandating coverage for pre-existing conditions.

Media

White House defends Trump claim tax plan will cost him ‘a fortune’

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The White House defended President Trump’s assertion that the forthcoming tax reform bill will cost him a “fortune,” while admitting he could benefit from cuts to corporate taxes.

Press secretary Sarah Huckabee Sanders responded to repeated questions from reporters during Tuesday’s briefing about Trump’s assertion, which he made during a Nov. 29 speech in Missouri.

Sanders defended the president by arguing that he hasn’t been focused on himself, but instead on the impact the bill would have on everyday Americans.

“In some ways, particularly on the personal side, the president will likely take a big hit. But on the business side, he could benefit,” she said.

“The biggest focus for this White House is to makes sure all Americans are better off today when this tax package passes than they were before hand. We really focused on invigorating the middle class and making sure they get more of their hard-earned money.”

Multiple independent analyses show that Trump, whose net worth is pegged by Forbes at $3.1 billion, stands to benefit from GOP tax plan.

When reporters noted that the overall impact on Trump’s bottom line is unclear because he has not released his tax returns, Sanders said that Trump will not release his tax returns while they are under audit, which is the line that Trump took during the presidential campaign too. The IRS, however, has said an audit does not prevent an individual from releasing personal tax information.

Using information from a leaked portion of Trump’s tax returns from 2005, NBC News quoted a tax expert estimating that the combined estates of both Trump and first lady Melania Trump would save about $1 billion from the repeal of the estate tax. The expert also estimated that Trump would save $22.6 million thanks to the repeal of the alternative minimum tax, after capital gains taxes were taken into account. But without Trump’s most recent tax returns, or a more full glimpse at the 2005 return, the full impact couldn’t be nailed down.

The House passed the final version of the plan Tuesday afternoon, with the Senate expected to vote on the bill later that same day.

[The Hill]

Trump Tells Republicans to Cut Taxes for the Rich, Like Trump

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President Donald Trump pushed Republicans on Monday to cut taxes on the rich by using money that’s slated to help lower-income Americans purchase health insurance.

Trump’s request, which the president relayed by Twitter from his trip through Asia, comes at a sensitive moment in tax negotiations. It also goes against his repeated insistence that tax legislation should be focused on providing middle-class tax relief rather than cutting taxes for wealthy filers like himself.

At times, the president has even predicted that he would pay more under a GOP plan (Trump has not released his tax returns, but multiple provisions in the House and Senate bills appear likely to benefit his business and family).

The House and Senate have released competing bills, neither of which ends the individual Obamacare mandate to maintain insurance coverage or lowers the top rate nearly as far as the president requested on Monday.

In the case of the House bill, the top rate would stay at the current 39.6 percent but would apply it to a higher income threshold: For married couples, it would only kick in after the first $1,000,000 in income versus $470,000 now.

The Senate bill would lower the top rate to 38.5 percent and also have a $1,000,000 threshold for married filers.

Republicans have weighed repealing the individual mandate in recent weeks, which the Congressional Budget Office estimates would free up $338 billion over 10 years for tax reform.

But the savings occur only because CBO predicts 13 million fewer people would have health insurance by 2027. It’s not clear whether that’s enough to reduce top rates to Trump’s desired levels or provide additional middle-class benefits.

In general, rich households already do well in analyses of the current tax plans thanks to provisions like ending the alternative minimum tax, reducing or repealing the estate tax, and cutting taxes for pass-through entities, all of which could potentially benefit Trump himself.

Under the new Senate bill, for example, the conservative Tax Foundation estimates the top 1 percent of taxpayers would see a 7.5 percent increase in after-tax income, versus less than 2 percent for the bottom 80 percent.

Democrats, who have spent weeks attacking the Republican tax bills as a boon to the rich, quickly seized on Trump’s remarks.

“Sooner or later, President Trump’s core supporters will realize that he’s selling them out,” Minority Leader Chuck Schumer, D-N.Y., said in a statement. “This proposal would send premiums for millions of Americans skyrocketing, all so that the wealthy can get an even bigger tax giveaway than they’d get under the original Republican plan.”

[NBC News]

Trump Tells Democrats He’ll ‘Get Killed’ Financially in GOP Tax Bill

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President Donald Trump called 12 Senate Democrats Tuesday, hoping to sway them in favor of the Republican tax cut bill, and told them he would personally “get killed” financially by the GOP bill. He said the wealthy need a repeal of the estate tax, according to multiple people who were present.

“My accountant called me and said ‘you’re going to get killed in this bill,'” the president said during a phone call from his trip in South Korea. He was apparently trying to increase Democratic support by claiming the bill would hurt wealthy taxpayers like himself, making the point that only the repeal of the estate tax would provide him any benefit.

Many of those Democrats are from states Trump won in 2016.

After the call with Trump ended, the meeting, which included his legislative affairs chief Marc Short and economics adviser Gary Cohn, turned into a sparring match between Democrats and White House officials over a politically broken Senate and who is to blame, multiple senators who attended the meeting said.

Short confirmed the president’s remarks and said they were part of a discussion on the elimination of individual deductions in the tax bill. Short said the estate tax was a separate issue.

Trump told the Democrats on the phone that he wanted a repeal of the estate tax in the bill because they had to give something to rich people, people in the room said.

“I think that we’ve been advocating for the elimination of the death tax for a while,” Short told NBC News, using the favored Republican term for the estate tax.

Trump, a billionaire, has not released any tax returns and so it has not been possible for the public to assess how this plan could benefit him personally and his family. Senate Republicans are rushing to release their tax cut bill later this week.

Asked to comment on the president’s remarks to the group, White House spokeswoman Sarah Sanders said, “The president did call in and urged senators to support the bill.”

Sen. Sherrod Brown, D-Ohio, said the president told the Democrats “this bill is terrible for rich people, and we (Democrats) don’t really agree.”

An analysis by the Joint Committee on Taxation found that after 2023, people making between $20,000 and $40,000 would see a tax increase. People making $200,000 to $500,000 per year would also see a tax increase after 2023 under the current GOP plan. A repeal of the estate tax would give the wealthy an additional $300 billion dollar tax break.

The House is amending its version of a tax overhaul initially released last week and the Senate is expected to unveil its version of a bill on Thursday. The Senate Finance Committee is expected to move quickly, advancing the measure though the committee process starting Monday, a timeline that Democrats say shuts them out of the process.

Senate Democrats complained about components of the House bill during the meeting, but Short and Cohn told them that the Senate bill will be much different than the House version and that the Senate bill is the one that matters.

The hour-long meeting became increasingly testy when Democrats complained about the process. Republicans have been crafting a bill behind closed doors and have sought no Democratic input.

Sen. Jon Tester, D-Mont., grew frustrated and got into a heated back and forth with Short.

“Give us your input now,” Short told Tester, according to the Montana senator.

Democrats continued to complain about Republicans locking them out of the process, making the argument that true bipartisan tax overhaul should get the support of 70 senators.

But Short responded to their concerns by blaming Democrats for Senate dysfunction because they have held up Trump’s nominees.

[NBC News]

Reality

Donald Trump stands to save over $1 billion dollars in taxes, with his tax reform.

Trump Promises ‘No Change to Your 401(k)’ as Congress Considers a Contribution Cap

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President Trump said early on Monday that his proposed tax plan would not prompt any changes to Americans’ tax-deferred retirement plans, pushing back against reports that the Republicans are weighing a proposal that would significantly reduce the income workers can save in these popular programs.

Mr. Trump’s shutdown of the proposal is the first of what many Republicans privately fear could be a presidential pattern that disrupts their efforts to pass a sweeping overhaul of the tax code. In it, Mr. Trump appeared to rule out a politically difficult idea, which, if enacted, would have provided some revenue to help pay for the tax plan.

Republicans’ ability to win passage of a tax package hinges on its ability to survive a complex set of legislative restrictions in the Senate. Republicans are attempting to cut business tax rates deeply, and also to cut individual tax rates, using a legislative route that allows them to bypass a Democratic filibuster and pass a bill with a simple Senate majority. To do that, they will need to make some tough political choices, eliminating some popular tax breaks, or employing some budgetary accounting tricks, in order to offset lost revenues from rate cuts.

Mr. Trump’s tweet concerned one of those accounting maneuvers, which would have allowed Republicans to effectively borrow tax revenues from the future to offset some rate cuts today. Reducing 401(k) contribution limits would force retirement savers to pay more in taxes today, as they sock away money, but less in the future, when they began withdrawing retirement funds tax-free.

Republicans had not decided whether to include a reduced cap on contributions in their final version of the tax bill even before Mr. Trump’s tweet.

Details of the Republicans’ tax bill have been closely held, and they would not comment on Friday about possible changes to 401(k) policies. It was not clear from Mr. Trump’s Twitter post on Monday whether he meant that he would not support a bill including alterations to 401(k) limits or that he knew the Republicans’ draft bill did not include such changes. Several sources said last week that such changes were under consideration as House Republicans prepare to release a tax bill in the coming weeks.

Democrats and other critics of Mr. Trump’s tax plan have said it would not help middle-class Americans, despite White House and Republican promises. “Tax cuts for corporations and the wealthiest Americans should not be paid for by increasing taxes on middle class Americans saving for retirement,” a group of Democratic senators, led by Senator Sherrod Brown of Ohio, wrote to the administration in September.

Any plan to cap 401(k) savings could bolster those arguments.

Republicans are discussing proposals that would potentially cap worker contributions at $2,400 annually for 401(k) retirement accounts, lobbyists and consultants have said. Currently, workers can put away $18,000 a year in tax-deferred plans; workers who are over 50 years old can save up to $24,000.

Advocacy groups have sprung up in Washington to fight any proposed change to those limits. One of those groups, the Save our Savings Coalition, said in a statement on Monday that it was “thrilled to see the President’s statement today, though we will continue to fight to ensure lawmakers do right by the middle class by preserving and expanding our retirement system as tax reform moves through Congress.”

[The New York Times]

Treasury removes report contradicting Mnuchin on tax cuts

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The Treasury Department has taken down a 2012 economic analysis that contradicts what Secretary Mnuchin has said about the effects of corporate tax cuts, the WSJ reports. What happened:

  • Mnuchin said workers benefit the most from corporate income tax cuts.
  • The 2012 analysis from the Office of Tax Analysis revealed that workers pay 18% corporate taxes, whereas owners of capital pay 82%, so cutting them impacts owners more.

A Treasury spokeswoman told the WSJ the paper was “dated” and “does not represent” current thinking at Treasury.

[Axios]

Trump Returns to False Tax Claim as He Pushes For Reform

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As part of a push for tax reform, President Trump bemoaned that the United States is the most heavily taxed nation on Earth.

That’s not true.

Trump is traveling to North Dakota to deliver a speech Wednesday afternoon on the importance of streamlining the tax code and easing the burden of taxes on citizens and businesses. In an early morning tweet, he promoted this trip and promised that under his administration the U.S. would no longer be “the highest taxed nation in the world.”

This statement is completely false. According to 2015 data from the Organization for Economic Co-Operation and Development (OECD), taxation accounted for 26.4 percent of the United States’ gross domestic product (GDP). This was lower than the average for the 35 nations in the OECD (34.3 percent) and in some cases far lower than comparable countries (45.5 percent in France, for instance).

In April 2016, the Pew Research Center concluded that U.S. tax bills are below the average for developed nations by examining OECD data dating back to 2001. It calculated “national-level income taxes plus mandatory social-insurance contributions as a percentage of gross income” for four different family types: a single working parent, a single working person without children, a married couple with two children where both parents work, and a married couple with two children where only one parent works. In all cases, the U.S. was below the average.

Trump has repeatedly touted this false claim. For instance, in a heated exchange with “Meet the Press” host Chuck Todd in May 2016, Trump said, “We’re the highest-taxed nation in the world. Our businesses pay more taxes than any businesses in the world. That’s why companies are leaving.” He also repeated the falsehood during debates and speeches.

PolitiFact rated Trump’s claim that the U.S. is “the highest taxed country in the world” as false in February 2016 after a Republican primary debate. The fact-checking website concluded that the U.S. “is far from the most taxed nation in the world, whether it’s an advanced industrialized economy or not.”

The website repeated its assessment on Wednesday after Trump’s tweet.

The Committee for a Responsible Federal Budget, a public-policy think tank, also rated Trump’s claim as false: “Notwithstanding our high corporate tax rate, the U.S. is not close to being the highest-taxed country in the world.”

The corporate income tax rate in the U.S. is high, at 35 percent, but the effective corporate tax rate — after accounting for deductions and tax breaks — is 18.6 percent, according to the Congressional Budget Office.

Determining which country has the highest tax rate is complicated and depends on the data researchers examine. Using data from OECD, Investopedia reported that Portugal has the highest tax rate for people with high incomes (61.3 percent); Belgium has the highest level for average-earning single people without children (42 percent); and Turkey has the highest levy for average-earning married couples with two children where only one spouse works (25.8 percent). And according to the World Economic Forum’s Global Competitiveness Report, Argentina’s total tax rate is an extraordinary 137.3 percent.

[Yahoo]

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