Trump Corporate Tax Cut & Ronald Reagan & JFK. @Larry_Kudlow, CNBC. @JohnCochrane, @HooverInst.

Oct 12, 2016, 04:00 AM

10/11/16 (Photo: ‪Reagan, in 1981, signed off on big tax cuts.‬) Twitter: BatchelorShow

Trump Corporate Tax Cut & Ronald Reagan & JFK. @Larry_Kudlow, CNBC. @JohnCochrane, @HooverInst.

“…Mr. Trump’s plan would cut taxes by $6.2 trillion over a decade, removing nearly 15% of projected federal revenue and delivering about half the benefit to the top 1%, according to the Tax Policy Center. Those richest households would get an average tax cut in 2017 of $214,690 and would see their after-tax income increase by 13.5%. Middle-income households, on average, would see tax cuts, too, though their gains wouldn’t be as large as a share of income. Mrs. Clinton, meanwhile, would increase taxes by a net $1.4 trillion, concentrated on the top sliver of U.S. households. The top 1% would see after-tax income fall by 7.4% and face an average tax increase of $117,760 in 2017. Most Americans in lower income groups would get small tax cuts. Mr. Trump’s tax cuts would amount to 2.6% of gross domestic product and be nearly double those that President George W. Bush pushed through Congress in 2001 and 2003. He would have the top 1% pay 25% of federal taxes. Mrs. Clinton, meanwhile, would increase taxes by 0.6% of GDP and make the top 1% pay 31.5% of the larger total. The Tax Policy Center is a project of the Brookings Institution and Urban Institute; Mr. Burman was a tax official in the Treasury Department under President Bill Clinton….”

Now, for lessons.

Income and corporate taxes. Compare this outcome to a consumption tax. Suppose that no matter what his income, Mr. Trump had to pay, say, 25% VAT on ...Mr. Trump’s opulent lifestyle over the years. At the nadir of his personal financial crisis in the early 1990s, his lenders put him on an annual “budget” of $450,000 in personal expenses — more than enough to sustain his lifestyle of lavish homes, private jets, country clubs and golf courses Assuming that he did not, in fact, pay 40% taxes on the $900,000,000 before he "lost" it, he would have ended up paying a lot more in consumption taxes. A consumption tax can be more progressive than an income tax. The attempt to tax income is at the root of all this mess.

It's not just Trump. The great news of this story is that it shines a light on the affairs of America's "dynastic families" (aristocracy), and the puzzle of why they all seem to be so heavily invested in real estate. From the Times again, ...America’s dynastic families, which, like the Trumps, hold their wealth inside byzantine networks of partnerships, limited liability companies and S corporations.
...According to Mr. Mitnick, Mr. Trump’s use of net operating losses was no different from that of his other wealthy clients. “If it wasn’t clear before, it is now: The tax code is tilted toward the rich in its statutory framework, its exceptions, and in how it is enforced and administered,” said Steven M. Rosenthal, a real estate tax specialist and senior fellow at the Urban-Brookings Tax Policy Center. It goes on. A real estate lawyer once explained to me how she set up trusts for one of these "dynastic families." On Junior's first birthday he gets complex shares in a limited partnership worth just under the gift tax limit. 50 years later, what do you know by capital gains it's worth $50 million, so the property passes outside of estate taxes.

What fixes it? Neither candidate's tax plan does anything that I see to eliminate these shenanigans among the super-rich who can afford to hire armies of lawyers. (Correct me if I am wrong, please. I have not read them in great detail as I know they will be shredded on Nov. 7). Mrs. Clinton's plans to raise personal income tax rates doesn't raise more taxes from people who have sheltered all their income. Raising capital gains and esta...