Wednesday, December 23, 2015

Trump's Tax Plan Does Little For Most Of His Populist Supporters

Donald Trump has a large group of supporters who respond favorably to his tough talk on terrorism and immigration, along with his comments on social values.  If his supporters were concerned about their economic welfare, they should look elsewhere.  His tax policies, like those of the other GOP contenders, have a similar theme.  Trump's plan would reduce federal tax revenue by $12 trillion over the next decade.  He sprinkles some tax cuts to the very poor but 35% of the total reduction in taxes go to the top 1%.  Hedge fund managers and private equity managers are major beneficiaries of his tax plan.  A $12 trillion loss of tax revenue over the next decade would shrink government spending.  Those who favor a smaller government may like that result but it would inevitably put pressure on government programs like Medicare and Social Security which are very popular with most of Trump's populist supporters.  They are of little value to hedge fund and private equity managers.

Trump's staff support his plan by claiming that Larry Kudlow likes the plan. Kudlow is an extreme ideologue who was a founder of The Club For Growth which punishes GOP politicians who do not push for major tax cuts and reductions in federal spending in non-defense sectors.  Most of the GOP contenders run their tax proposals through Club For Growth for approval.  Trump and the other GOP contenders feed populist jargon to their base and they feed the social elite with dollars.

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