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

By Yuval Rosenberg

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.

Have a great weekend! Send your tips
and feedback to yrosenberg@thefiscaltimes.com.
Follow us on Twitter:
@yuvalrosenberg,
@mdrainey and
@TheFiscalTimes. And please tell your
friends they can
sign up here for their own copy of this
newsletter.

News

Views and Analysis