The Trump administration is already no stranger to doing things without passing them through Congress first, which admittedly is a privilege that many Presidents have enjoyed — Executive Orders can be a patch of sorts for desired changes during a time when the President does not have the political will in Congress to achieve a particular goal. Barack Obama used EOs to achieve a number of goals that America welcomed despite opposition from the majority-Republican Congress.
Then again, those were good things: DACA, increasing the minimum wage at least for federal employees to a little over $10 an hour, rules from the EPA cutting carbon emissions, expanded research into the gun violence epidemic… If those things sound familiar to you more recently, it could be because Trump has overturned them all.
That’s what we’ll have to hope for if Trump follows through with the next unilateral action his administration is considering: A giant tax cut for the obscenely wealthy.
It hasn’t been long since the Republicans added $1.5 trillion to the deficit with their last round of tax cuts — a transparent effort to buy votes with a temporary financial benefit for middle-class Americans that expires while giving permanence to those same benefits to the top one percent of earners.
This next round doesn’t even promise a benefit for lower-income earners.
The plan devised by Treasury Secretary Steven Mnuchin is to index the “capital gains” tax to inflation. The capital gains tax is paid on the difference between what you buy an investment for and what you sell it for — if you bought a share of a stock, for example, for $50 and then sold it in a year for $75, you would pay tax only on the $25 in “profit” you made between buying and selling, despite the fact that the $75 is considered income in the year in which you sell it. It’s a method of making sure you don’t get taxed twice on the $50 you already had to buy the stock with.
Indexing the tax to inflation would mean that rich people would pay taxes only on the difference between what they sell their investment for and the price they bought it for, adjusted for inflation. Not that their original $50 was ever worth a smaller amount, but they would now be able to treat it as though they paid a higher price, and therefore got a smaller profit than they actually got.
In case you haven’t worked out the problem with this yet, it’s the fact that the vast majority of Americans don’t make their money with capital gains. Only the extremely rich do. And anytime there’s a tax cut in one place, there has to be a tax increase elsewhere, and in this case, the poor and the middle class will pick up the $10 billion per year cost of this tax cut.
But let me just dumb this down one more step, at the risk of sounding like a jerk, but just so you can share this with your right-wing family members in hopes of reaching them: This is Donald Trump taking money directly from your family and giving it to his friends.
Featured image via Wikimedia Commons