Trump’s Tax (Avoidance) Plan

http://www.nytimes.com/2016/10/03/opinion/campaign-stops/trumps-tax-avoidance-plan.html

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Donald Trump’s tax avoidance isn’t just a story about Donald Trump. It’s also a story about the American tax system and how kind it has been to the wealthy over the past few decades.

The truly wealthy – like those in the top 0.1 percent of earners – paid more than half of their income in federal taxes in the 1950s, ’60s and ’70s. Since then, Washington has bestowed very large tax cuts on them, with declines in the top income-tax rate, the estate tax rate and corporate taxes. The wealthy have also become expert at dodging taxes, as Trump did.

Over the same period, of course, the rich have received much bigger pre-tax pay increases than the middle class and poor. It is a double whammy of rising inequality. And it’s unfair: much of the growing bounty from the American economy has flowed to a small slice of the population.

The tax rates of the 1950s, ’60s and ’70s may well have been too high. But the current rates are still far below those levels – and, again, pre-tax inequality is far higher. In today’s economy, higher tax rates at the top make sense.

My reading of the data is that President Obama’s tax increases have closed about half of the gap between the lows of the total federal tax rate on the top 0.1 percent during George W. Bush’s presidency and the highs of post-World War II years. Obama has effectively used the money to reduce inequality, paying for tax cuts for everyone else, health insurance, education and other programs, as well as deficit reduction.

Here’s where we return to Trump.

His clearest policy proposal is a gigantic tax cut for the wealthy, reversing the progress Obama has made against inequality. Trump would shower $1.3 million a year on the average member of the top 0.1 percent, according to the Tax Policy Center. Hillary Clinton, on the other hand, wants to raise their taxes further (but still not to the levels of the post-War years).

The larger meaning of Trump’s tax avoidance seems quite clear. He’s running for president partly to help other wealthy people be like him – and avoid paying taxes. If you want to understand his economic agenda, look at his tax dodge.