Donald Trump has openly said that he doesn’t care at all about the rules that prohibit the president and those around him from profiting from their government positions. In breaking with longstanding precedent, he is holding on to his business empire and having his children run it as he carries on with the business of being president.
With the government forced to pay the bills for the Secret Service to stay at his golf resorts and hotels, Trump obviously feels no compunction about gouging taxpayers to put more money in his pockets. But this open graft is almost certainly the least important way in which Donald Trump’s family and friends will profit at the expense of the rest of us.
We still don’t know most of the details of Trump’s tax plan, but the main parts of the plan we do know look like it was written to benefit him personally as much as possible. First, it gets rid of the Alternative Minimum Tax (AMT). This tax was put into law in 1986 to ensure that wealthy people, who can use deductions to drastically reduce their taxes, will still have to pay some amount of tax.
In his leaked 2005 tax return we know that Trump paid 25 percent AMT rather than the much lower rate that his aggressive use of tax loopholes would have allowed. It’s not a big surprise then, that Trump’s tax plan gets rid of the AMT.
Trump is also proposing to allow individuals who have pass-through corporations to pay his newly lowered 15 percent corporate income tax rate instead of the top individual tax rate that he would set at 35 percent. The vast majority of Donald Trump’s income comes through pass-through corporations, which means that he would likely be paying a tax rate of less than 15 percent under his tax plan. Of course all rich people will arrange to have their money come through pass-through corporations if the Trump tax plan goes into effect, but he will have a head start.
Trump also eliminates the estate tax, a tax that only 0.2 percent of estates pay now. (If you think your kids are going to be paying the estate you’re deluded about your wealth.) Since Trump is likely to have an estate worth billions when he dies, this tax cut could easily put more than a billion dollars into his kids’ pockets.
But a tax code designed for the very rich is only the beginning. Trump is intent on running the whole government to make him and his family and friends richer.
During the campaign, Trump endlessly complained about China’s “currency manipulation.” He argued, with real cause, that China’s practice of propping up the dollar against the Chinese yuan was increasing the U.S. trade deficit and costing us manufacturing jobs. He assured us that he would get tough with the Chinese and demand they raise the value of their currency.
When he had the opportunity to press his case in a meeting China’s President Xi Jinping last month, he folded completely. He came out of the meeting and told everyone that he and President Xi were good buddies and he could see no reason to press Mr. Xi about the currency values. While Trump didn’t get anything that would improve the job prospects of American workers, China did grant Ivanka Trump several valuable trademarks, so he didn’t walk away empty-handed.
But it is not just the Trump family that is profiting off his administration, the investor Carl Ichan, who serves as all purpose “unpaid” adviser looks to earn a substantial profit off of his advice. Ichan engaged in discussions on altering federal regulations that require refineries to use a certain amount of ethanol in gasoline and other refined products.
Following these discussions, Trump reversed a position he had taken in his campaign. Ichan stands to make more than $100 million from this reversal.
Unfortunately, letting the affected industry control the regulatory process seems to be pretty much the norm in the Trump administration. His top financial regulators are virtually all from Wall Street, with Goldman Sachs being the leading source of Trump team talent.
Trump’s pick to head the Federal Communications Commission is a former lawyer for Verizon whose first target in his new position is to end the policy of net neutrality, which ensured everyone equal access to the web. Scott Gottlieb, Trump’s pick to head the Food and Drug Administration, was a board member of a pharmaceutical company and has received hundreds of thousands of dollars for fees as a consultant to the industry.
In short, the outlook for most of the country may not look great in the Trump years, but Trump’s family friends should do very well.