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Levin writes: "Back in December 2017, Donald Trump signed into law the Tax Cuts and Jobs Act, claiming the bill was going to do wonders for the middle class. Of course, as it turned out, that wasn't exactly accurate."

Protesters demonstrate against Trump's tax cuts. (photo: Getty)
Protesters demonstrate against Trump's tax cuts. (photo: Getty)

Trump Is Planning Another Tax Cut for the 1% Without Congressional Approval

By Bess Levin, Vanity Fair

28 June 19

The White House is reportedly working on a tax break from which 86% of the benefits would go to the 1%. And it may bypass Congress to get it done.

ack in December 2017, Donald Trump signed into law the Tax Cuts and Jobs Act, claiming the bill was going to do wonders for the middle class. Of course, as it turned out, that wasn't exactly accurate. In reality, the legislation was all about saving corporations billions—money that, shockingly, has not trickled down from the pockets of multinationals, top executives, and shareholders. In fact, American workers received, on average, a bonus of 1 cent, despite the elaborate fantasy spun by the White House that the TCJA resulted in sizable cash prizes for the little guy, all while the extremely rich benefited bigly. And now, less than two years later, Trump is pretty sure the über-wealthy could use another tax break.

Bloomberg reports that the White House is working on a plan to cut taxes by adjusting capital gains for inflation, a move that would significantly reduce taxes on long-held investments. Currently, when an asset like real estate or a stock is sold, tax is paid on the appreciation tied to inflation. So while corporate stock with dividends held for 10 years would be hit with an effective tax rate of 24.3% at present, the White House plan—which may be advanced "soon"—would mean the same holding would be subject to a tax rate of 21.4%, according to the nonpartisan Congressional Research Service. The move would reduce tax revenue by an estimated $102 billion over a decade and the benefits would almost exclusively go to the wealthiest people in the country:

the top 1% [would receive] 86% of the benefit, according to estimates in 2018 by the Penn Wharton Budget Model.

Naturally, this is not something that would have a snowball's chance in hell of passing the House, where lawmakers are (rightfully!) still bristling about the fact that the 2017 tax cuts disproportionately helped the rich. So the White House has a plan: cut out the middle man and do it by executive order. To give you an idea of how unpopular an idea that is, Steven Mnuchin, one of Trump's most loyal foot soldiers, doesn't even want to be a part of it:

The work is largely taking place at the White House because the Treasury Department has been slow-walking the process, over concerns that the change could be challenged on legal grounds and that it might require Congress to rewrite the law, the people said.

But Trump has told confidants recently that he remains deeply invested in making the change, they said. Trump last year said in an interview with Bloomberg News that he was considering indexing capital gains to inflation"¦. A Treasury Department spokesman declined to comment. The White House hasn't asked the Justice Department for a formal legal opinion on the matter, the people familiar with the matter said.

While the Bush White House—the one that thought the executive branch could basically do whatever it wanted—mulled such a plan, it was reportedly shelved over arguments among senior officials as to whether or not it was legal. Luckily, the Trump administration has at least one guy in its corner ready to praise this thing to the high heavens. "It would be a giant economic stimulus for the economy, said Stephen Moore, the guy who dropped out of consideration for a seat on the Fed Board after, among other things, experts deemed him economically illiterate. "It would help the stock market and it could unleash hundreds of billions of dollars of new capital for investment.

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