How Trump’s Racial Demagoguery Makes It Easier for the GOP to Sell Tax Giveaways to the Wealthy
Donald Trump wants to give himself a tax cut.
His new tax plan, a one-page summary unveiled on Wednesday in the last-minute scramble for an accomplishment before the end of his first 100 days, would cut the business rate down to 15 percent. Now, Trump isn’t a business, but he owns one, and it’s not structured like a typical one. Instead, it’s a “pass-through” corporation, meaning its earnings are passed through to the owners’ individual returns and then taxed at the appropriate marginal rate. Trump’s tax cut is structured to slash rates on pass-throughs as well other corporate forms. In other words, if passed, the president will save himself a nice chunk of change, on the order of tens of millions of dollars. (We don’t know how much he’ll actually save, because—unlike every other modern president before him—he refuses to release his tax returns.)
It’s of a piece with his approach to governance, where the presidency isn’t a sacred office as much as it’s a convenient base for siphoning wealth from public coffers, through petty graft and public policy. (For the former, see his regular “official” trips to Trump-branded properties.)
But while it’s hard to ignore this glaring conflict of interest, it’s worth turning attention to how this tax cut would affect the country at large. The details are straightforward. If passed in its present form, Trump’s plan would slash individual and business rates, repeal the estate tax, and end the alternative minimum tax (which hits a number of affluent households, in addition to the highest income earners). What’s more, Trump would eliminate the 3.8 percent investment surtax found in the Affordable Care Act, another break for the wealthiest households and estates.
Together, these tax cuts would cost an estimated $5.5 trillion over the next 10 years, according to a preliminary analysis from the Committee for a Responsible Federal Budget. The Tax Policy Center, citing its analysis of Trump’s campaign plan, predicts a somewhat larger loss: $6.2 trillion over the next decade, with $20 trillion added to the national debt by 2036. If this were trillions being paid toward infrastructure and investment—in health care and education—that number might be sustainable, for the simple reason that you get substantive benefits in return for your spending and a foundation for long-term prosperity. This is just gravy for the rich: The large bulk of these cuts will go to the highest earners and wealthiest Americans. More than 30 percent of income gains accrue to those with annual incomes more than $200,000, according to the Center for Budget and Policy Priorities, with 14.3 percent accruing to those with incomes above $1 million.
Trump slammed traditional conservatism throughout the GOP primary, but it’s here on taxes where he is most in line with conservative ideologues and where his program lines up with radical Republican governance at the state level of the past eight years. After winning power in states as different as Kansas, Louisiana, North Carolina, and Wisconsin, these Republicans—led by Govs. Sam Brownback, Bobby Jindal, Pat McCrory, and Scott Walker, respectively—launched unprecedented attacks on government, cutting services, slashing assistance, and unraveling hard-fought gains in education and infrastructure to fund experiments in upper-income tax cuts, slashing rates to the bone and starving public coffers. Similar experiments have brought similar results to each state: stagnant growth, rising poverty, higher income inequality, and recurring budget crises.
Trump’s domestic program is this, calibrated for the country at large. His budget would slash tens of billions of dollars from anti-poverty programs; his health care plan would leave tens of millions of Americans without health insurance; and his tax proposals would blow a hole in the federal budget, starving the government of revenue and leaving future Americans the burden of attempting to re-knit the social safety net.
At first glance, it’s an odd populism that takes from the many to give to the few, that abandons the anxious and suffering in favor of the wealthy and comfortable. But remember, Trump’s populism wasn’t just an appeal to jobs and economic interest—it was a racial appeal. Trump cast blame on Muslims, Hispanic immigrants, and foreign others; he pledged to reopen the mines, recover the factories, and restore the white male industrial wage-earner to his perceived place at the top of the material and social hierarchy.
Trump is busy delivering the latter part of this formula, extolling archetypes of white male masculinity and—through his attorney general, Jeff Sessions—using federal power to crack down on those he defined as racial threats during the campaign. That is populism too, and it is potentially potent enough to satisfy those supporters who may lose out under Trump’s economic program. If nothing else, the racial interests of white Americans have always been at the forefront of white politics, a powerful force across class and social lines. The collapse of support for all kinds of public goods, from robust schools to neighborhood pools, is tied to the perceived beneficiaries. When the majority of white Americans believed those beneficiaries looked like themselves, they backed those investments. When they didn’t, they rejected them, either explicitly or eventually under the guise of “color blind” ideologies. With that said, there are exceptions to this general story, among goods that don’t have the same spatial dimensions as schools or housing but still deliver benefits, which is one reason the conservatives have had little traction fully gutting the welfare state.
Still, we should remember, at least, that now would not be the first time that millions of white Americans backed racial demagogues in the destruction of public goods as a means to restore white hegemony over a smaller, more limited public. We would, in a way, be reverting to form, extending to the country what has defined those regions where race hierarchy was most rigid.