Let Them Eat Cake
Now that the GOP is focused on Tax Reform, President Donald Trump can use his office to do a little family estate planning. Let’s start at the end and work our way back.
I don’t claim to fully understand the GOP tax reform bill but here is the gist. The GOP wants to simplify the tax code and cut taxes without increasing the deficit. Keeping the tax bill “revenue neutral” also means that it can pass with 51 votes in the Senate instead of a two third majority. It also makes the tax cuts permanent. George W’s tax cuts increased the deficit and thus only lasted 10 years.
To keep the tax bill revenue neutral, the Republicans need to repeal Obamacare. That would cut a trillion in taxes. Then the Border Adjustment Tax (BAT) would bring in more than a trillion dollars in extra revenue. The revenue would come from a 20% tax increase on imports.
So there you go! Easy peasy lemon squeezy, right?
Well, the Republicans were unsuccessful at repealing Obamacare, so there goes one trillion. Now a huge coalition of companies, mostly retailers and the Koch bothers, are waging war against BAT. Stores like Walmart and Amazon might survive an increase in an import tax, but say goodbye to Sears, JC Penny and maybe even Macy’s. So there goes the second trillion.
Why? Nearly all products that we consume are either wholly or partly made overseas and will be subject to the 20% tax. That means part of the trillion dollars will eventually be paid by American consumers in terms of higher prices.
But just for argument sake, let’s say that House Speaker Paul Ryan and President Trump resurrect the Obamacare debate and get it repealed. And let’s say that they rally support for BAT and get the votes. Also there is another trillion dollars being bantered about concerning a flood of overseas money that will come back into the country, but I didn’t quite grasp the concept.
So that is three trillion dollars to counter any increase in the deficit, making it likely the Republican Tax Reform Bill could pass. But what is in it?
Basically the GOP wants to simplify the tax code by condensing the seven individual income tax brackets into three brackets. The highest bracket is now is 39.6% and will go down to 33%. Republicans want to slash rates for corporations and individuals but also eliminate many corporate loopholes. Even though the corporate tax rate will go down, if loopholes are eliminated, corporations will be paying more in taxes.
The corporate and individual tax rates are still being banged out. House Republicans were looking at 25% corporate rate, Trump suggested 15% rate, then House Republicans moved their proposed corporate rate to 20%. So, who knows.
The new tax code calls for eliminating the Alternative Minimum Tax (ATM) and the Estate Tax. The ATM was imposed in 1969 by Richard Nixon to be certain that 155 millionaires did not escape taxation by investing in tax-free municipal bonds. Now it keeps wealthy taxpayers from using loopholes to avoid paying taxes. Not all those taxpayers are millionaires though.
Some aspects of the tax bill would be advantageous to the Trump family and some parts wouldn’t. The problem remains how the American public is supposed to know if President Trump is making money from his office of president?
If he does not release his tax returns then we don’t know if Tax Reform will “make America great again” or make his family even wealthier. There will be times when tax reform might do both, but gauging from all of the protests, the public wants to know.
We do know from his 2005 tax return that if the AMT were eliminated it would have saved him $31 million.
The biggest game changer for the Trump family fortune will be the elimination of the Estate Tax. At the end of this term Mr. Trump will be 74 years old. There is something slightly un-American about Ivanka, Eric and Donald Jr. not paying a dime of inheritance tax on billions of dollars because their daddy was president.
When Hillary Clinton accused him of not paying a cent of federal tax during a debate, Mr. Trump replied, “That makes me smart,”
And so agrees the late New Yorker billionaire hotelier Leona Helmsley who once said “We don’t pay taxes. Only the little people pay taxes.”
The Reluctant King
Is it just me or would most people feel more comfortable knowing President Trump was dropping bombs on Syria while sitting in the Situation Room in Washington D.C.? I don’t think Americans appreciated seeing President Trump’s son-in-law, treasury secretary, secretary of commerce, and other irrelevant advisors, sitting on gold painted bamboo chairs at a Florida beach resort while dealing with issues of national security. This, while his real advisors, the Secretary of Defense, chairman of the Joints Chief of Staff and Vice President skyped from Washington to participate.
The impromptu “situation room” was set up at his luxury country club, Mar a Lago, where club members and staff, who have no security clearance, wander freely. The resort could easily be infiltrated by foreign spies. “Hostile intelligence services would love to plant bugs in a place like this,” John McLaughlin, a former acting CIA director, told Politico.
Melania hasn’t even moved into the White House, and the president has spent seven weekends out of 13 at his Mar a Lago resort in Palm Beach, Florida. By the way they are acting, it seems President Trump feels that he can just “phone it in” for the next four years.
His first National Security test happened while he was hosting Japanese Prime Minister Shinzo Abe at Mar a Lago. Right before dinner, President Trump received confirmation that North Korea had launched a ballistic missile into the Sea of Japan, a violation of multiple U.N. Security Council resolutions.
According to Time magazine, “part of the drama played out in the middle of the Mar a Lago patio, more than 800 miles from the White House Situation Room and in full view of hundreds of club members and their guests.”
Hearing of North Korea’s missile test, Trump and his advisors held an “open-air situation room” at the club and guests at the club were warned not to use cell phones when the president was near.
Quoted in Time magazine, “‘Holy moly!!!’ club member Richard DeAgazio wrote on Facebook, adding a photo of a military aide carrying the nuclear football. ‘It was fascinating to watch,’ De Agazio said.”
President Trump’s second national security test was when Bahar al-Assad used chemical weapons against his own people. Trump ordered missile strikes against Syria while at Mar a Lago, before sitting down with Chinese leader Xi Jingping for a meal.
A picture of the beach resort’s situation room shows Trump and his advisors crammed into a space the size of a large storage closet. A “Quiet Area” sign was taped to the door. The White House Situation Room on the other hand is a 5,000 sq-ft conference room in the basement of the West Wing, which has secure, advanced communications equipment.
It’s not just annoying that the president doesn’t use the situation room made just for this purpose at the White House, but the fact that tax payers are covering the cost of two situation rooms and three households for our billionaire president.
Melania, his wife, lives with their son Barron in New York. The NYPD says it costs taxpayers $127,000 to $146,000 a day to protect the first lady and her son while they reside in Trump Tower. Security is also provided for Barron Trump while he attends private school. When President Trump is also in New York, the amount is closer to $308,000.
A petition on Change.org criticizes Mrs. Trump for living in Trump Tower instead of moving to Washington DC and requests that the Trumps pay for security themselves.
The petition states, “The Tax Payers have provided a perfectly acceptable home which has met the needs of every other previous president.”
Estimates of the president’s trips to Mar a Lago range from $1 million to $3 million per weekend, which on the high end would mean more than $20 million has already been spent.
The Tampa Bay Times reports, “Trump appears unbothered by the millions of dollars the visits are costing for security and in lost business, the traffic snarls or the hypocrisy, given his past criticism of former President Barack Obama’s travel and golfing.”
According to the Time article, “At the club, Trump lives in a sectioned-off area of the 128-room mansion, but he’s easy to spot. The sun-swept grounds are a sanctuary where he can bask in the adulation of paying members who pepper the President for favors and make policy suggestions to his senior staff.”
Palm Beach is one of the richest places in America and access to the president doesn’t come cheap. The initiation fee at Mar a Lago is $200,000 which is double the price before Trump’s election in November. That doesn’t include the $14,000 yearly dues.
His aides say the president doesn’t hobnob with the club members out of duty. They say it gives him perspective and a sounding board outside the Washington bubble.
And Republicans like to say that liberals live in a bubble. President Trump invented it.