Trump’s Eyeing Another Huge Tax Cut for the Rich and It’s Probably Illegal
Since 2016, even as much of the country has been consumed by all things Donald Trump—his personal life, his administration, his alleged crimes financial, sexual, and political—rich people have been quietly having a great time. Corporate profits are enormous, the stock market has (mostly) been excellent, financial regulations have been gutted by a completely compliant federal bureaucracy, and, last year, in their one successful bid to pass big-league legislation, Trump and Republicans pushed through an enormous tax cut that will overwhelmingly benefit their fellow rich people.
So you might think that with unemployment low and lots of other macro-economic indicators that don’t capture actual human misery looking so strong, Republicans would be content to dig in and hype this latest chapter of American greatness on the midterm campaign trail. Turns out, as the New York Times reports, one of the more cartoonishly plutocratic people in Trump’s orbit is considering using executive authority to unilaterally slide an extra $100 billion or so to the rich by slashing taxes on capital gains. Here’s the gist:
Steven Mnuchin, the Treasury secretary, said in an interview on the sidelines of the Group of 20 summit meeting in Argentina this month that his department was studying whether it could use its regulatory powers to allow Americans to account for inflation in determining capital gains tax liabilities. The Treasury Department could change the definition of “cost” for calculating capital gains, allowing taxpayers to adjust the initial value of an asset, such as a home or a share of stock, for inflation when it sells.
(snip)
Capital gains taxes are overwhelmingly paid by high earners, and they were untouched in the $1.5 trillion tax law that Mr. Trump signed last year. Independent analyses suggest that more than 97 percent of the benefits of indexing capital gains for inflation would go to the top 10 percent of income earners in America. Nearly two-thirds of the benefits would go to the super wealthy — the top 0.1 percent of American income earners.
Basically, the idea here is that instead of taxing the difference between how much people pay for investments and how much they’re worth when they sell them—a.k.a. capital gains—the government would invent a new way to tax a narrower slice of that investment money. For example, if a wealthy heiress invested $500,000 in a wellness company’s stock in the year 2000, and sold it for a cool million and a half this year, they’d owe capital-gains taxes on $1,000,000, or the amount the investment ballooned in the market. Under current law and a capital-gains rate of about 20 percent, that might mean a tax bill of $200k. But if the original $500k was adjusted for inflation to $746,412.91 (as of this year), the capital gains would be reduced from $1 million to a little over $750k. That, in turn, would reduce the tax bill to about $150k—a savings of nearly 50 grand she probably didn’t need and would be extremely unlikely to spend rather than hoard.
The move was deemed an illegal one by a (Republican) administration in 1992—the GOP has long craved to use the federal government to just straight-up give money to the rich, but in that era, at least, they concluded they’d never get away with this. What’s changed since? Well, partisanship has exploded, rich people have gained an even stronger stranglehold over American democracy, and a guy with a history of mob ties and business deals with corrupt oligarchs won the presidency. In some ways, it makes a certain kind of sweet, sweet dystopian sense: The rich have gotten away with this much already in the Trump era, and with the Russia investigation looming and the prospect of Congress flipping in the midterms, now seems like as good a time as any to make another cash grab.
Besides, even if they don’t get away with this kind of thing—if the courts intervene and decide that the whole Congress-makes-tax-policy thing remains the law—they’ll likely have already won.
“No matter what the courts do, you’ll get the main economic benefit the day, the month after Treasury does this,” one GOP tax lobbyist told the Times. “I think it’s going to happen and it’s going to be huge,” Grover Norquist, the GOP tax king and vape apologist, told the paper.
In other words: We know we’re being fucking craven as all hell, but so what? Who’s going to stop us?
Good question.
Sign up for our newsletter to get the best of VICE delivered to your inbox daily.
Follow Matt Taylor on Twitter.
This article originally appeared on VICE US.