WASHINGTON ― President Donald Trump’s top economic advisers on Wednesday proposed trillions of dollars in tax cuts for millionaires under a plan billed as the biggest tax reform in over 30 years.
In a one-page statement of “principles” for tax reform provided to reporters, the administration offered few specifics. They did insist on three major perks for the wealthy, however ― reducing the tax rate on stocks, bonds and real estate investments; eliminating inheritance taxes for millionaire heirs and heiresses; and bringing down the tax rate on the largest corporations to less than half of what it is now.
The inheritance tax ― disparaged by conservatives as a “death tax” ― only applies to millionaires. Magnates must will at least $5.49 million to their heirs ($11 million for couples) to qualify for the tax. Heirs and heiresses pay an average rate of 16.6 percent on these inheritances, according to the Center on Budget and Policy Priorities, generating about $275 billion for the government over 10 years.
Trump would also repeal the 3.8 percent tax on stocks, bonds and real estate investments that Obamacare imposed on individuals making at least $200,000 a year. A full 90 percent of this tax break would accrue to households making at least $700,000 a year, which would receive an average tax cut of $25,000 a year, according to the nonpartisan Tax Policy Center.
Corporate tax cuts also disproportionately favor the wealthy, because corporate profits flow to the owners of corporate stocks, who tend to be rich. More than 92.8 percent of households making at least $250,000 a year own at least $10,000 in stock, according to research from New York University economist Edward N. Wolff, compared with just 19.1 percent of households that earn $25,000 to $49,999. Households in the top 1 percent receive an average of 36 percent of their income from capital gains (stocks, bonds and other financial investments), according to the Congressional Budget Office, while those in the lowest 20 percent receive an average of about 5 percent of their income this way. Read full story here