Trump’s tax plan should be titled ‘The Art of the Con’

If you believe that the $18.1 trillion federal debt should be much bigger, that the rich don’t have nearly enough, and that corporations need a tax-rate cut of 57 percent, then Donald Trump has just what you are looking for.

The real estate mogul and reality TV star who wants to be president put out a document he called a tax plan. Like many of his business deals, it is long on boastfulness and short on money to pay the inevitable bills.

Trump told “60 Minutes” that his plan will work because “overall, it’s going to be a tremendous incentive to grow the economy and we’re going to take in the same or more money … We’re gonna grow the economy so much.”

He would cut the top tax rate from 39.6 percent to 25 percent, cut the corporate rate from 35 percent to 15 percent and eliminate the estate tax so the children of billionaires inherit tax-free. (Most of the estate tax falls on economic gains that have never been taxed, as I showed in my book “Perfectly Legal”.) That sounds like more of the tried and failed Republican tax policies of the past 35 years.

Trump says he can make up for the lost tax revenue partly by requiring hedge-fund managers to pay at the top tax rate and ending corporate tax deferrals — something I have championed for years. But there’s just dimes in these proposals to offset lost dollars.

He would also eliminate the income tax for 75 million households, up from the 53 million households in 2013, by exempting the first $25,000 of earnings from tax, double that for married couples. Currently about 36 percent of tax returns show no tax owed, mostly because people are poor (about 35 million households) or have children who qualify for the $1,000 per child tax credit championed by Republicans in Congress.

Speaking of children, assuming Trump is worth the $10 billion he claims (his election disclosures indicate its likely closer to $1 billion), his five children would save about $800 million each in taxes on their inheritances from his estate-tax repeal. That would seem to put his children in the same situation as hotel scion Barron Hilton, whom Trump once dismissed because he owed his riches to being a member of “the lucky sperm club.”

Trump also says he would close loopholes to raise revenue, but does not say which. That’s interesting because Trump benefits from an outrageous loophole, a 1990s tax-code change that let’s people who work just 15 hours a week in real estate live tax-free.

All you need is a enough buildings so that your annual write down for depreciation exceeds your income from other sources such as, say, a television show and royalties for putting your name on neckties made in China. Everyone who does not qualify for this loophole is limited to offsetting no more than $25,000 of earned income with depreciation.

I wonder if we will ever see Trump’s tax returns and learn just how much he saves because of this loophole. Early in his career, his tax returns showed that paper losses from real estate were so huge he escaped income taxes, as I revealed in “Temples of Chance,” my 1992 book on Trump and other casino moguls.

When I read the Trump tax plan, vagaries and all, I literally burst out laughing at its fairy tales. But I also knew most people would not understand that his plan was fantasy wrapped in deception, Trump’s art of the con.

Having spent five decades studying taxes I know the Trump tax is as realistic as human transporters. Having covered Trump on and off since 1988, I also knew that reporters would faithfully regurgitate his plan with no more than a dash of skepticism.

The Trump tax cannot do anything but create economic disaster. But don’t take my word for it; take the word of one of the leading opponents of taxes in America, the nonprofit Tax Foundation.

Its computer model shows that federal revenues would drop by almost $12 trillion in the next decade. That is well more than a third of what the government is expected to collect in individual and corporate income taxes in ten years after President Barack Obama leaves office so the annual federal deficit would balloon.  

Under President Obama the annual budget deficit has shrunk by two-thirds to 2.5 percent of the economy, which is less than the average of George W. Bush budgets. By contrast, Trump’s plan would put the deficit deep into double digits.

But it’s actually much worse than that, as the Tax Foundation’s disclaimers show. Its computer model ignores such basics as “fiscal or economic effects of interest on debt” and “does not require budgets to balance over the long term.” The Tax Foundation also ignores the effects of spending cuts (or increases) on the economy overall.

Trump the would-be tax cutter also promises to be Trump the big spender.

Trump wants universal health care. That would sharply lower America’s overall healthcare costs, if done wisely. But while private spending would fall or even be eliminated, government spending would rise.

Next comes the cost of rounding up millions of illegal aliens. Trump says he would remove people summarily, but our Constitution limits such power. The president can only do what Congress authorizes and finances; he must follow the due process judicial procedures that safeguard liberty.

Then there’s that nearly 2,000-mile wall Trump wants to build on the Mexican border.

And what of Trump’s plans for more wars? He escaped the Vietnam era draft, but says the military school his father sent him to because of his persistent misbehavior was like serving. Trump is very clear, as even far right political website have noted, that he will send your sons and daughters where he would not go — into battle.

The cost of a new Middle East war, just in terms of drains on the taxpayers, would likely continue well into the 22nd century. After all, the last Civil War dependent’s pension was still being paid in 2013. The peak year for World War II veteran benefits was 1993.

My guess is that the ridiculousness of his tax plan means that Trump is about to fade politically, allowing him to resume his lucrative career as a television entertainer, where he can flourish.

For the sake of your wallet and your country, you should hope so.