How would Donald Trump's tax plan benefit him? Let us count the ways | Michael Paarlberg

It’s a kind of truism that politicians often turn out to be the best poster children for the sins they rail against, whether government waste or adultery. Consider rent-seeking, the use of politics for personal enrichment by special interests, which is how Republicans regard most regulations. There’s a whole branch of economics, favored by conservatives, called public choice theory, which analyzes politicians as fundamentally selfish economic actors, similar to businesses, and policy as the product of their profit-maximizing motives, rather than anything so quaint as “the public interest”.

It’s hard to imagine a better living embodiment of this theory than Donald Trump, or a better example of rent-seeking than his tax plan, from which he stands to potentially gain tens of millions of dollars a year.

It’s impossible to say exactly how much, due to both Trump’s refusal to release his own tax returns, and the tax plan itself, which is so vague and incomplete that it doesn’t even specify which incomes its new income tax rates would apply to. But taking Trump at his word that he’s “really rich”, it’s safe to say he’d personally benefit from several marquee features of his plan.

First is the proposal to slash the corporate income tax rate from 35% to 15% and then apply that lower rate to pass-throughs, such as LLCs and S corporations. Economist Dean Baker explains pass-throughs here: essentially they are corporate structures which include real estate companies like Trump’s, whose business earnings are currently taxed at the personal income, rather than corporate income tax rate.

The Trump organization owns nearly 500 such businesses, according to his attorneys. Under current law, their earnings can be taxed at up to the highest personal income rate of 39.6%; under Trump’s plan, they would be taxed at 15%, equivalent to the personal tax rate of individuals earning under $37,950 a year. According to Baker, this alone could net Trump $65m a year.

Second is a repeal of the estate tax, a 40% tax on large inheritances that’s been a longtime target by Republicans for elimination. This is despite, or more likely because of, the fact that it only applies to richest 0.2% of Americans, making it one of the most progressive sources of tax revenue. Only those passing on estates worth more than $5.45m ($10.9m for couples) pay any tax at all, a category in which Trump comfortably fits. Accepting, for the sake of argument, Trump’s self-professed net worth of $10bn, that would be a hefty savings to one day pass on to his kids.

Third is a repeal of the alternative minimum tax, a tax designed to make sure rich people who exploit loopholes to avoid taxes entirely pay some fair share. According to leaked tax returns, Trump paid $31m in the AMT in 2005. In fact, that year he paid a total of $38.5m in taxes, meaning eliminating the AMT would wipe out the lion’s share of Trump’s personal tax liability, slashing his effective income tax rate from 25% to 5%.

In fact, one could go through virtually every item on the plan (it doesn’t take long) and see some personal benefit to Trump, from cuts to both business and personal income taxes for top earners, to the elimination of the surtax on investment income under Obamacare.

Conservatives generally aren’t concerned with questions of fairness: if the rich get a massive tax cut, as long as the poor get a modest one, who are they to complain? And they don’t tend to regard tax cuts as rent-seeking, since that money was theirs to begin with: it’s not being taken away from anyone.

But other things are. Taxes can’t be taken in isolation. They pay for public services which, unlike tax cuts, mostly go to people who need them. Trump’s tax plan is a direct reflection of his budget plan, which seeks to eliminate programs that actually benefit poor people and small businesses, from the Appalachian Regional Commission to the Economic Development Administration to the Low Income Home Energy Assistance Program. To regard older people who receive support to heat their homes in the winter as rent-seekers, but not Trump’s real estate cronies, is a gross perversion.

Tax cuts should be regarded as what they are: government subsidies, lobbied for by special interests and paid for by everyone else. And we will, contrary to Steven Mnuchin’s assertion that tax cuts pay for themselves, a fantasy that’s been disproven by every tax cut on record. Even with “dynamic scoring”, Trump’s tax plan would balloon the deficit by an estimated $390bn a year. Trump’s tax plan, like his budget plan and every other plan, is less a fleshed out policy than a vision of what he sees as the nation’s top priorities, one that places him and his family at the top.