President Donald Trump hit the road again Wednesday to sell his tax proposal and, once again, relied on false statements to make the case.
“We want lower taxes, bigger paychecks and more jobs for American truckers and American workers,” Trump said before an audience of truckers and business groups at an Air National Guard hangar in Middletown, Pennsylvania.
Trump claimed that the U.S. has the highest level of corporate taxation in the world ― a statement that is misleading.
“When it comes to the business tax, we are now dead last among developed nations,” Trump said. “Our rate is the least competitive rate. We have the highest tax rate anywhere in the world. How foolish is this? Our business tax rate is 60 percent higher than our average economic competitor.”
While the U.S. does have the highest nominal corporate rate, of about 39 percent, that’s not what most corporations actually pay. The Congressional Research Service has said the effective corporate rate is closer to 27 percent, roughly in line with the rate of other advanced countries.
As for the general level of taxation for both business and individuals relative to the size of the economy, data from the Organization for Economic Cooperation and Development put the U.S. in the middle of the pack at about 25 percent, well below the average of 34 percent for developed countries.
The Republican tax framework would lower the corporate rate to 20 percent while reducing the number of individual income tax brackets and lowering the top rate to 35 percent. The plan would also simplify the tax code by eliminating most deductions.
Trump insisted Wednesday that the middle class would get a tax cut under the Republican outline.
“You’re going to have so much money to spend in this wonderful country,” Trump promised. “We will cut taxes for everyday, hardworking Americans.”
Though the details are sketchy, other Republicans, including House Speaker Paul Ryan (R-Wis.) and Trump’s own chief economic adviser, Gary Cohn, have said that not every middle-class household would necessarily benefit from the plan. An analysis by the Tax Policy Center found that nearly a third of households with annual incomes between $50,000 and $150,000 would face higher taxes under the plan, which would disproportionately benefit the wealthiest Americans.
Trump and other Republican leaders have touted an increased “standard deduction” in their framework for reform. The standard deduction currently allows a family to reduce the amount of their income subject to taxes by $12,700. The Republican plan would bump the deduction to $24,000 while eliminating most itemized deductions, including the “personal exemption” of $4,050 per person.
Some families would lose out with the bigger standard deduction because they benefit more from the current deduction plus personal exemptions for family members that would be eliminated. Republicans have suggested a larger child tax credit to make up the difference, though they haven’t specified an amount.
Another key component of the GOP plan would eliminate a tax on inheritances ― a provision that would benefit only a small number of extremely wealthy families each year but which Republicans have tried to sell as a small-business benefit. Wednesday night, Trump called it the “crushing, unfair and horrible estate tax, sometimes known as the death tax.”
He added that eliminating the inheritance tax would specifically benefit the Ewells, a Pennsylvania family that’s been in the trucking business since 1946 and owns H.R. Ewell Inc.
Trump said that eliminating the estate tax would allow Calvin Ewell to pass the business to his son the way it had been passed down to him.
However, estates worth less than $5.4 million are exempt from the tax ― a threshold considerably higher than the $675,000 that was in place before the George W. Bush tax cuts of the early 2000s.
Arthur Delaney and S.V. Date debated the likelihood that Congress will actually pass tax reform on the HuffPost Politics podcast. The conversation starts at 28:50.
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