The Truth About Trump’s and Biden's Tax Plans

The Truth About Trump’s and Biden's Tax Plans

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Plus, $62 million in small business aid fraud
Friday, August 28, 2020

The Truth About Trump’s and Biden's Tax Plans

In his speech Thursday night accepting the GOP presidential nomination, President Trump, like many other speakers at the Republican National Convention this week, unleashed a flood of falsehoods and misleading statements.

Trump’s overarching message was a stark and disturbing one: Joe Biden would be a Trojan horse for socialism, opening the door for the “wild-eyed Marxists” on the radical Left to transform America into a socialist dystopia, undermining the greatness that Trump had restored before the coronavirus pandemic struck — greatness that Trump will quickly restore again now that the virus has been effectively controlled and a vaccine will soon be ready under his unparalleled leadership.

The reality:
That message, and the various claims underlying it, may resonate with Trump’s ardent base of supporters, but it distorts reality. For one thing, more than 42,000 new Covid-19 cases were reported Wednesday alone and 2,700 more Americans have died since the week began, the Associated Press reports. CNN counted more than 20 “false, exaggerated or misleading claims” by Trump. The Washington Post’s fact-checkers listed 25 statements that caught their attention as part of what they called the president’s “tidal wave of tall tales, false claims and revisionist history.”

The distortions go well beyond politics as usual. “While all political confabs involve some level of spin and revisionism, the Republican National Convention this year has stood out for its brazen defiance of facts, ethical guidelines and tradition, according to experts on propaganda and misinformation,” the Post’s Toluse Olorunnipa reports.

Trump bashes Biden on taxes:
The GOP claims about a sinister socialist agenda under Democrats upending an American way of life focused largely on stoking fears about public safety, with Trump claiming that under Biden, “the radical Left will defund police departments all across America,” even though Biden has said he opposes defunding the police.
But Trump also touched on taxes as a key difference between him and Biden. Here’s what Trump said on Biden’s tax plan, and his own:

"[Biden] has pledged a $4 trillion tax hike on almost all American families, which will totally collapse our rapidly improving economy. ... On the other hand, just as I did in my first term, I will cut taxes even further for hard-working moms and dads. I will not raise taxes. I will cut them, and very substantially. And we will also provide tax credits to bring jobs out of China back to America, and we will impose tariffs on any company that leaves America to produce jobs overseas.”

The facts: It’s true that Biden’s tax proposals are expected to raise about $4 trillion over a decade, but analyses by the Tax Policy Center and the Committee for a Responsible Federal Budget (CRFB) say that the increases would be heavily focused on top earners and corporations. Biden has pledged that he will not raise taxes on people earning less than $400,000. The Tax Policy Center projects that more than 90% of the tax increases under Biden’s plan would be borne by the top fifth of income earners, and two-thirds of the increases would hit the top 1% of earners.

"The Biden tax plan is highly progressive, increasing taxes for the top 1 percent of earners by 13 to 18 percent of after-tax income, while indirectly increasing taxes for most other groups by 0.2 to 0.6 percent," the CRFB said in a report last month.

As for Trump’s tax plan, well, there isn’t one per se. The president has talked about cutting taxes on capital gains and for the middle class, and he has said he wants payroll taxes he deferred through the end of the year by executive action to be forgiven. But he hasn’t released details of what he would do. A bullet-pointed list of Trump’s second term agenda released this week by his campaign includes vague promises to “Cut Taxes to Boost Take-Home Pay and Keep Jobs in America” and enact "Made in America” tax credits and “Tax Credits for Companies that Bring Back Jobs from China.”

“The Trump campaign has promised more detail on his second-term agenda, and we certainly hope that includes a formal tax plan…but we're not holding our breath waiting for that to happen,” Kiplinger’s Rocky Mengle wrote this week. “Unfortunately, there's a good chance we'll have to make do with the scant information currently available when trying to figure out what the president would do about taxes during a second term. Plus, adding to the confusion, the president has occasionally come out in favor of a particular tax proposal, only to reverse course or walk back support for it later.”

That all makes it difficult to project what tax policies Trump might pursue if re-elected. “Without further details or clarification, it is difficult to fully analyze President Trump’s second term tax policy agenda,” the Tax Foundation’s Erica York says. It's safe to say Trump won’t be looking to raise taxes, but it’s also worth noting that any large-scale tax changes or cuts the president might seek to enact would have to be done through congressional legislation, meaning they would more than likely need substantial Democratic support.

Read more about Biden’s tax plan at the Tax Policy Center or Committee for a Responsible Federal Budget. Read more about Trump’s possible tax plans at Kiplinger or the Tax Foundation.

Quote of the Day

“But so I think, I think it would be, I think it would be very, very, I think we’d have a very, very solid, we would continue what we’re doing, we’d solidify what we’ve done, and we have other things on our plate that we want to get done.”

President Trump, in an interview with The New York Times this week, on his second term agenda. Trump’s list of actions he’s taken and would continue to pursue included increasing military spending, cutting taxes, eliminating regulations, reinforcing the border and appointing conservative judges, the Times reported.

Trump’s Plan to Benchmark Drug Prices Probably Won’t Do Much to Lower Costs: Report

President Trump signed four executive orders in July that propose ways to lower drug costs, one of which calls for the federal government to use the typically lower prices set in some other countries as a benchmark for U.S. prices. That approach has long been opposed by pharmaceutical firms, and in an unusual move, the text of the executive order was held back for 30 days to give drug companies a chance to come up with a counterproposal.

The 30-day period has lapsed but the text of the executive order, which Trump has referred to as the “most favored nation” proposal, has still not been released. The drug industry has reportedly pitched an alternative proposal that would cut some drug prices in Medicare Part B by roughly 10% and cap some out of pocket expenses for people in Medicare Part D, at a purported savings of $100 billion over 10 years. But it’s not clear if Trump has been briefed on the counteroffer, and he continues to talk up his own proposal, claiming that it will bring drug prices down for American consumers.

That’s not likely, according to an analysis by the Kaiser Family Foundation, which says the proposed plan may not have much of an effect on drug prices for most Americans. Assuming the proposal is similar to one made by the Trump administration in 2018 — and a photo of the text of executive order captured during the signing ceremony suggests that it is — the plan would apply only to Medicare Part B drug spending, which accounts for just 7% of all prescription drug spending in the U.S.

The plan would potentially lower drug prices for about 4 million people in Medicare Part B, Kaiser said, but do nothing for the 45 million Medicare Part D beneficiaries, the 157 million people with employer-provided insurance and the millions more who lack coverage altogether.

$62 Million in Small Business Aid Fraud Just the ‘Tip of the Iceberg’

From $52,000 watches to six-figure Italian sports cars, some crooks are making it easy to detect fraud in the Paycheck Protection Program, a $525 billion effort to help small businesses remain open during the coronavirus pandemic.

The Justice Department has charged nearly 60 program participants with fraud worth about $62 million, according to a report in The New York Times Friday. The fraudulent schemes were easy to spot, investigators said, thanks to ostentatious spending and poorly faked documents.

Here’s one case, as described by the Times:

“[A] Texas man with convictions for forgery and robbery sought loans from six lenders using shell companies with no employees and, in one application, the stolen identity of a wine-shop owner who died in April. He collected $1.6 million and spent hundreds of thousands of dollars on booze, nightclubs, a Rolex and a 2019 Lamborghini Urus, according to the complaint filed against him in federal court in Houston.”

The problem is that the fraudulent activity uncovered so far is just “the smallest, tiniest piece of the tip of the iceberg,” Hannibal Ware, the inspector general of the Small Business Administration, told the Times.

More than 5 million businesses received loans through the program, which were forgivable if they were used to cover payroll and, to a lesser extent, rent and utilities. About 29,000 of the loans were for more than $2 million, and investigators say they will all receive scrutiny in a process that could take years.

Investigators have plenty of leads to work with. The Small Business Administration, which oversees the PPP, has received 42,000 tips on its fraud hotline, a huge jump from the 800 or so it received all of last year, before the program was created.

Number of the Day: 50.7 Cents

The gasoline tax in New Jersey will increase by 22% on October 1, pushing it up to 50.7 cents per gallon, state officials said Friday. The tax hike is required by a 2016 law that calls for the state treasurer to review revenues and projected outlays from the state’s $16 billion transportation trust fund, and raise taxes if revenues are falling short. Thanks to the coronavirus, which has sharply increased unemployment and forced thousands to work from home, gasoline sales dropped by 39% in the state between March and May, costing the state millions in lost tax revenues.

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