Trump's tax plan wins the news cycle – but will he lose the messaging war?

David Smith in Washington

“Somebody put out the concept of a hundred-day plan,” Donald Trump said last week. That somebody was Donald Trump, who set out a “contract with the American voter” for his first 100 days in office during a speech in Gettysburg, Pennsylvania, last October.

Despite playing it down, the president is now in a headlong rush to rack up achievements before Saturday’s milestone. The frenzy continued on Wednesday with what the White House described as the most significant tax reform since Ronald Reagan in 1986 and one of the biggest tax cuts in history for both individuals and corporations.

But to Trump’s critics it was everything they feared and predicted, a brazen plan to rob from the poor and give to the rich, which in this instance includes the president himself. The Patriotic Millionaires, a group of 200 wealthy Americans who have opposed tax cuts for their own class, issued a pithy response: “Patently absurd.”

The sweeping reforms propose reducing individual taxes from seven brackets to three and doubling the standard deduction. Simplification is likely to be seen as a boon by millions of people forced to spend hours filling in labyrinthine paperwork every year. But opponents say a proposed elimination of the estate tax would hand billions of dollars to the top 0.2%, including Trump’s own family.

Dramatic cuts in the taxes paid by both big and small corporations are intended to spur economic growth and create jobs. The top marginal tax rate would fall from 35% to 15%. Small businesses that account for their owners’ personal incomes would see their top tax rate go from 39.6% to the corporate tax rate of 15%.

But tax is fiendishly complicated and a case study in not being able to please everyone. At a packed press conference, Gary Cohn, a former Goldman Sachs president who is now Trump’s chief economic adviser, acknowledged: “This isn’t going to be easy. Doing big things never is. We’ll be attacked from the left and we’ll be attacked from the right.”

Trump got his fingers burned on healthcare when a hastily compiled bill on which he seemed vague was shot down in the House of Representatives. Tax reform could meet a similar fate, not least because it is partly contingent on knowing what new healthcare legislation will look like.

In addition, experts warn that the tax cut could reduce federal revenue by at least $2tn, swelling a national deficit that already stands at $19tn. This would be hard for many Republicans to contemplate, throwing more sand in the gears of Trump’s legislative agenda.

Joe Kennedy, a former chief economist at the commerce department and now a senior fellow at the Information Technology and Innovation Foundation thinktank, wrote in a blogpost that the plan would “add trillions of dollars to the deficit over the next decade, an issue the administration further aggravates by proposing to cut taxes on so-called ‘pass-through’ businesses”.

“The unfortunate effect of these flaws will be to divert attention away from other proposals that have a greater chance of passing Congress, which will slow progress toward much-needed tax reform to boost the US economy.”

In addition, Reagan had the advantage of bipartisan cooperation, unlike the rancour and polarisation that scars Washington today – a dysfunction that helped get “drain the swamp” Trump elected. This time, Democrats have already declared their opposition until Trump releases his own tax returns, but the treasury secretary, Steven Mnuchin, said on Wednesday that he “has no intention” of doing so.

Soon after, Chuck Schumer, the Democratic minority leader in the Senate, warned that the White House plan would be rejected by taxpayers of all political stripes. Progressive senator Bernie Sanders, a former presidential candidate, added that it would only make a rigged system worse and do little to help a collapsing middle class.

Democrats will also be under pressure from their progressive base to resist what is seen as an old-fashioned return to Reaganite trickle-down economics likely to entrench inequality. Trump and his cabinet – the wealthiest ever – stand to benefit.

Delvone Michael, a Tax March executive committee member, said: “Today, Donald Trump proved once again that he is looking out for himself, wealthy corporations, millionaires, and billionaires – not the American people. His plan – crafted by Wall Street for Wall Street – gives even more tax breaks to wealthy corporations and cuts the rate that corporations pay by more than half. Big companies are already swimming in profits – they don’t need extra help raking in more money.”

But for now, on Trump’s own terms, it is a case of mission accomplished. As the 100-day deadline nears, he has won the news cycle with headlines such as “biggest tax cut ever” and flashbacks to Reagan-era photos of Tom Cruise in Top Gear and world heavyweight boxer Mike Tyson. He has deflected attention from his lack of legislative achievements and the ongoing investigations into his alleged links to Russia. He will claim to be a man of action, thinking big and leaving the awkward details to others.

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