Think of Tax Reform as the Trump Familys Christmas List - Alan Blinder, WSJ
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Let’s imagine a conversation that probably never took place between Mr. Trump and the GOP’s tax writers. Suppose he asked for legislation that offered the maximum possible benefits to the Trump family. What would such a bill look like?
Not even the greatest tax experts can answer that question definitively for lack of Mr. Trump’s tax returns. But based on fragmentary public information, we can make some pretty good guesses. Here’s my list of the top presents proposed for the Trump family Christmas tree. They are huge.
• Repeal the estate tax. Forbes keeps showing that Mr. Trump is not as rich as he claims, but no one doubts that he is superrich. Even using Forbes’s “low” estimate of his net worth, dropping the estate tax rate from 40% to zero, as the House bill does, would stuff more than a billion dollars into the stockings of Mr. Trump’s heirs. Joyous tidings indeed. (The Senate version, which keeps the estate tax but raises the threshold of wealth subject to it, would give them much less.)
• Create a preferentially low tax rate for income from pass-through businesses. Income from partnerships and S-corporations flows through to the personal tax returns of their owners. Yes, some of these businesses are tiny mom-and-pop operations. But they also include large law firms, enormous hedge and private-equity funds, and more than 500 businesses owned solely or partly by Mr. Trump himself.
No one knows how much income the president derives from these pass-through operations. But a rough guess based on his leaked 2005 tax return suggests it might be over $100 million a year. If that’s roughly right, dropping the tax rate from around 40% to around 25% (again, the House version—the Senate is less munificent) would amount to more than $15 million a year.
• Abolish the alternative minimum tax... His 2005 tax return revealed that 81% of the taxes he paid that year—$31.2 million of $38.4 million—derived from the alternative minimum tax, not from the regular income tax. Getting rid of this tax would bring great comfort and joy to the Trump family.
• Leave egregious loopholes for real-estate developers intact. Tax reform is supposed to be about closing loopholes, and the real-estate industry enjoys an astonishing variety that are ripe for elimination, many of which the GOP bills do not touch.
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These and other gimmicks will remain in the tax code. Yet the president claimed his accountant told him he’d be a “big loser” from the GOP’s tax-reform proposal. Really? Was that accountant Bob Cratchit ? Better fire him.
Mr. Blinder is a professor of economics and public affairs at Princeton University and a former vice chairman of the Federal Reserve.
https://www.wsj.com/articles/think-of-tax-reform-as-the-trump-familys-christmas-list-1512086885?tesla=y
