2015: Trump Suggested A “Fair Tax Or A Flat Tax” Would Help “Simplify Things.” According to Fox News, “TRUMP: Well, you have groups that lobby and they fight and they want to get deductions and they want to get all sorts of other things. And in the end, it gets to be so expensive and the rates keep going up, and at one time they were higher, and now they’re a little bit lower, but then they get increased again. And it’s just a very, very complicated thing and you need an I.Q. of about 180 to figure it out. And people can’t figure it out. It would be nice to put all these preparers out of business, to be honest with you, because that’s what should happen. We will see that what happens. But a fair tax or a flat tax or somebody -- in Europe, they do the VAT tax, which actually is pretty simple, based on consumption, and it does simplify things a lot. It’s got its big advantages, some disadvantages.” [“Your World With Neil Cavuto,” Fox News, 4/15/15]
Trump Said, “We Can Leave The Tax Code The Way It Is And Simplify It, Or You Could Go To A Form Of A Flat Tax. You Could Go To A Fair Tax.” According to an interview of Donald Trump in Time, “Donald Trump was interviewed by TIME Editor Nancy Gibbs, Washington Bureau Chief Michael Scherer, and political correspondent Zeke Miller on Aug. 18. […] Are you willing to sign the ‘No New Taxes’ pledge of Grover Norquist? Well I’m thinking about it but I have a problem because I may want to switch taxes around. I want to save the middle class. And I have hedge fund guys that are making a lot of money that aren’t paying anything, okay. And I don’t know how his pledge relates to that. But I know a lot of bad people in this country that are making a hell of a lot of money and not paying taxes. And the tax law is totally screwed up. The complexity of it, the size of it. I mean I spent millions of dollars every year on lawyers and accountants just to do a tax return. And I want to put H&R Block out of business. I want to make it very simple. And we can leave the tax code the way it is and simplify it, or you could go to a form of a flat tax. You could go to a fair tax. There’s a lot of things you could do.” [Time, 8/20/15]
2015: Trump Retweeted “We Need Flat Tax.” According Trump via Twitter, “‘@Finenco: Rand Paul #speech is a repeat of every other #politician. Heard it before @TexasGOP @nytimes We need flat tax #Vote 4 DonaldTrump” [Twitter - @realDonaldTrump; Trump Twitter Archive, 2/8/23]
2015: Trump: “In Europe, They Do The VAT Tax, Which Actually Is Pretty Simple, Based On Consumption, And It Does Simplify Things A Lot.” According to Fox News, “TRUMP: Well, you have groups that lobby and they fight and they want to get deductions and they want to get all sorts of other things. And in the end, it gets to be so expensive and the rates keep going up, and at one time they were higher, and now they’re a little bit lower, but then they get increased again. And it’s just a very, very complicated thing and you need an I.Q. of about 180 to figure it out. And people can’t figure it out. It would be nice to put all these preparers out of business, to be honest with you, because that’s what should happen. We will see that what happens. But a fair tax or a flat tax or somebody -- in Europe, they do the VAT tax, which actually is pretty simple, based on consumption, and it does simplify things a lot. It’s got its big advantages, some disadvantages.” [“Your World With Neil Cavuto,” Fox News, 4/15/15]
VAT Tax Collects Taxes At Each Stage Of The Supply Change Instead Of Just At The Point Of Sale. According to Thomson Reuters, “VAT (value-added tax), on the other hand, is collected by all sellers in each stage of the supply chain. Suppliers, manufacturers, distributors, and retailers all collect VAT on taxable sales. Similarly, suppliers, manufacturers, distributors, retailers, and end consumers all pay VAT on their purchases. Businesses must track and document the VAT they pay on purchases to receive a credit for the VAT paid on their tax return. Under a VAT regime, tax jurisdictions receive tax revenue throughout the entire supply chain, not just at the point of sale to the final consumer.” [Thomson Reuters, 8/16/23]
The VAT Tax Would Be Regressive And Disproportionately Impact Lower Income Individuals. According to the Tax Policy Center, “Because lower-income households spend a greater share of their income on consumption than higher-income households do, the burden of a VAT is regressive when measured as a share of current income: the tax burden as a share of income is highest for low-income households and falls sharply as household income rises. Because income saved today is generally spent in the future, the burden of a VAT is more proportional to income when measured as a share of income over a lifetime. Even by a lifetime income measure, however, the burden of the VAT as a share of income is lower for high-income households than for other households. A VAT (like any consumption tax) does not tax the returns (such as dividends and capital gains) from new capital investment, and income from capital makes up a larger portion of the total income of high-income households.” [Tax Policy Center, accessed 7/26/24]
Trump Proposed Replacing The Income Tax With A Universal Tariff, Which Would Disrupt The Economy While Benefitting The Wealthiest Americans. According to the Washington Post, “During a meeting with House Republicans in mid-June, Trump floated the possibility of replacing the income tax with a universal tariff. He offered no other specifics, but in principle, the idea would pose a major disruption to the U.S. economy while bolstering the wealth of the richest Americans.” [Washington Post, 6/27/24]
Eliminating The Income Tax And Replacing It With Tariffs Would Disproportionately Harm Poor Households. According to the Washington Post, “Some economists have a different view, saying that cutting taxes while raising tariffs could have harmful consequences by widening the gap between the rich and the poor. Companies often pass on the cost of tariffs to consumers in the form of higher prices. As a result, economists say, lower-income households would be hit hardest by tariffs since they spend a greater share of their income on goods. Income taxes tend to fall more heavily on wealthier Americans since many low-income workers do not make enough money to owe federal income taxes.” [Washington Post, 6/17/24]
Trump Said He Would Consider Ending The Electric Vehicle Tax Credit Because, “Tax Incentives Are Not Generally A Good Thing.” According to Reuters, “Republican presidential candidate Donald Trump said on Monday that if elected he would consider ending a $7,500 tax credit for electric-vehicle purchases and that he would be open to naming Tesla CEO Elon Musk to a cabinet or advisory role. ‘Tax credits and tax incentives are not generally a very good thing,’ Trump told Reuters in an interview after a campaign event in York, Pennsylvania, when asked about the EV credit. […] If elected, Trump could take steps to reverse Treasury Department rules that have made it easier for automakers to take advantage of the $7,500 credit or could ask the U.S. Congress to repeal it entirely. While president, Trump sought to repeal the EV tax credit which was later expanded by President Joe Biden in 2022. ‘I'm not making any final decisions on it,’ Trump said of the EV tax credit. ‘I'm a big fan of electric cars, but I'm a fan of gasoline-propelled cars, and also hybrids and whatever else happens to come along.’ He added that he would rescind the Biden administration rules that will prod automakers to build more EVs and plug-in hybrids to meet stricter emissions standards and said he sees a ‘much smaller market’ for EVs because of cost and battery range issues.” [Reuters, 8/19/24]
1986: Congress Passed The Kiddie Tax As A Way To Prevent Parents From Transferring Wealth To Their Children As A Way To Avoid Taxes. According to the Wall Street Journal, “Congress passed the Kiddie Tax in 1986. Until then a parent could, say, give a child appreciated stock and the child could sell it, pay tax at lower rates, and use the proceeds to pay for college tuition or a Corvette. The 1986 provision levied the Kiddie Tax on a broad range of children’s ‘unearned’ income above an exemption, which currently is $2,200. Above that amount, the children owed tax at the parents’ rate. The levy has never applied to a youngster’s earnings from being a camp counselor or designing websites.” [Wall Street Journal, 5/10/19]
2017: Trump’s Tax Plan Changed The Kiddie Tax Rate From The Parent’s Rate To Trust Tax Rates, Resulting In A 37% Tax On Income Over $12,751. According to the Wall Street Journal, “Many features of the 1986 Kiddie Tax were complex, however. To simplify, the 2017 overhaul switched the Kiddie Tax rate from the parents’ rate to trust tax rates. These kick in at a very low level of taxable income: For 2019, the top rate of 37% takes effect at just $12,751.” [Wall Street Journal, 5/10/19]
2018: After The Death Of Her Husband, Rebecca Headings Paid A Top Rate Of 12% On Her $55,000 In Income While Her Son Paid 37& On His $29,300 In Annual Survivor’s Benefit. According to the Wall Street Journal, “Rebecca Headings’s husband, U.S. Navy Senior Chief Petty Officer Gary Headings, died of a heart attack at age 39 in 2017. After Mr. Headings’s death, his son began getting an annual survivor’s benefit paid to many families who have lost active-duty service members—often called Gold Star families. Last year, that benefit was about $29,300. But his son, age 6, owed nearly $7,000 in federal taxes on it. ‘At first I was stunned, and then angry. My child’s tax rate is higher than mine,’ says Ms. Headings, a social worker in Virginia Beach. Ms. Headings’s top rate on her 2018 income of less than $55,000 was 12%. Her son’s top rate is 37%. In past years, her son’s tax bill would have been far lower. But a 2017 change to the so-called Kiddie Tax often boosts rates on ‘unearned’ income received by children of middle- and low-income families—including her son.” [Wall Street Journal, 5/10/19]
College Students From Low-Income Families Who Received Financial Aid Technically Owed Taxes On It At Trust Rates Under The TCJA’s Kiddie Tax. According to the Wall Street Journal, “The Kiddie Tax revision also threatens college students from lower-income families who receive financial aid for expenses other than tuition and supplies. By law such income is taxable, says Tim Steffen, a tax specialist with Robert W. Baird & Co. If a family is in a low tax bracket, then a child receiving taxable aid could wind up in a much higher bracket—with no money to pay the tax. Mark Kantrowitz, the publisher of Savingforcollege.com, estimates that more than three million students could be affected.” [Wall Street Journal, 5/10/19]
Increased Taxes On Homeowners And Higher Deficits Caused By Trump’s Corporate Tax Cuts Lead To A 4% Reduction In Home Prices Over Seven Years (Average Outstanding Mortgage Length). According to ProPublica, “Here’s how it works. Zandi took what financial techies call the ‘present value’ of the property tax and mortgage interest deductions that homeowners will lose over seven years (the average duration of a mortgage) because of changes in the tax law and subtracted it from the value of the typical house. That results in a 3% decline in national home values below what they would otherwise be. The remaining one percentage point of value shrinkage, Zandi says, comes from the higher interest rates that he says will result from the higher federal budget deficits caused by the tax bill. He estimates that rates on 10-year Treasury notes, a key benchmark for mortgage rates, will be 0.2% higher than they would otherwise be, which in turn will make mortgage rates 0.2% higher. Even though interest rates on 10-year Treasury notes are at or near record lows as I write this, they would be even lower if the Treasury were borrowing less than it’s currently borrowing to cover the higher federal budget deficits caused by Trump’s tax bill. If Zandi’s interest-rate take is correct — it’s true by definition, if you believe in the law of supply and demand — even homeowners who aren’t affected by the inability to deduct all their real estate taxes and mortgage interest costs are affected by the tax bill. How so? Because higher interest rates for buyers translate into lower prices for sellers and therefore produce lower values for owners.” [ProPublica, 10/10/19]
Moody’s Analytics: U.S. Home Prices Declined 4%, $1.04 Trillion, Relative To What They Would Be Without Trump’s Corporate Tax Cuts. According to ProPublica, “Zandi says that because of the 2017 tax law, U.S. house prices overall are about 4% lower than they’d otherwise be. The next question is how many dollars of lost home value that 4% translates into. That isn’t so hard to figure out if you get your hands on the right numbers. Let me show you. The Federal Reserve Board says that as of March 31, U.S. home values totaled about $26.1 trillion. Apply Zandi’s 4% number to that, and you end up with a $1.04 trillion setback for the nation’s home owners. That’s right — a trillion, with a T. Please note that Zandi isn’t saying that house prices have fallen by an average of 4%. That hasn’t happened. What he’s saying is that on average, house prices are about 4% lower than they’d otherwise be.” [ProPublica, 10/10/19]
Trump Tax Plan Would Eliminate Deductions For Gambling Losses, Interest Expense, Union Or Club Expenses, Moving Expenses, And Unreimbursed Employee Expenses That Accounted For More Than 2% Of A Filer’s Gross Income. According to Business Insider, “Part of President Donald Trump's tax reform outline released on Wednesday would do away with itemized deductions on individuals' tax returns except for the mortgage and charitable giving deductions. Here's a rundown of the itemized deductions this plan would cut: […] Gambling losses: […] Interest expense: […] Union and/or Club expenses: […] Moving expenses: […] Miscellaneous expenses: If an expense on the Internal Revenue Service’s list, including tax preparation fees and unreimbursed employee expenses, accounts for more than 2% of a filers gross income, it can be deducted.” [Business Insider, 4/26/17]
The TCJA Eliminated “Miscellaneous Itemized Deductions […] Tax Preparation Fees, Investment Fees, Hobby Losses, Job Search Expenses, Safe Deposit Boxes And Unreimbursed Business Expenses.” According to Kiplinger, “The Tax Cuts and Jobs Act lowered tax rates and nearly doubled the standard deduction, which is expected to reduce taxes for about 65% of taxpayers, according to the Tax Policy Center. But an estimated 29% of Americans will see no change to their tax bill, and 6% of you will pay more. If you’re one of the unfortunate taxpayers who don’t get a lower tax bill, it might be because the tax overhaul scrapped or capped some popular tax breaks. Here are 8 common tax deductions that were repealed or limited by the new tax law. […] Miscellaneous Itemized Deductions These deductions included the write-off for tax preparation fees, investment fees, hobby losses, job search expenses, safe deposit boxes and unreimbursed business expenses. Previously, taxpayers could deduct these expenses if they exceeded 2% of their adjusted gross income. The loss of these deductions could be particularly costly for employees with significant unreimbursed business expenses. For example, an employee who uses his or her own car to visit clients—and isn’t reimbursed for the mileage—could end up with a higher tax bill this year. The change could also prove costly for employees who work remotely, since they’ll no longer be allowed to deduct the cost of maintaining a home office. (The new tax law doesn’t affect the ability of self-employed workers to claim a home-office deduction.)” [Kiplinger, 1/16/19]
Trump’s Tax Plan Would Eliminate Deductions For Expenses Related To Casualty And Theft Losses, Tax Preparation Fees, Job Search Expenses, And Car Registration Fees. According to the Detroit Free Press, “The Trump plan calls for eliminating all tax deductions on individual tax returns — except the deduction for home mortgages and charitable gifts. If you itemize, as many middle class families do, you're going to want to watch this potential change. […] But under Trump's plan, many tax deductions would vanish — including the deduction on medical and dental expenses, real estate taxes, casualty and theft losses, expenses related to tax preparation fees, expenses relating to job hunts, a deduction for the amount that individuals pay for state and local income taxes and the value-based portion of car registration fees.” [Detroit Free Press, 4/26/17]
The TCJA Eliminated The Casualty And Theft Deductions Outside Of Federal Disaster Areas. According to Kiplinger, “The Tax Cuts and Jobs Act lowered tax rates and nearly doubled the standard deduction, which is expected to reduce taxes for about 65% of taxpayers, according to the Tax Policy Center. But an estimated 29% of Americans will see no change to their tax bill, and 6% of you will pay more. If you’re one of the unfortunate taxpayers who don’t get a lower tax bill, it might be because the tax overhaul scrapped or capped some popular tax breaks. Here are 8 common tax deductions that were repealed or limited by the new tax law. […] Casualty Losses If a tree fell on your home last year, you probably won’t be able to deduct losses that aren’t covered by insurance unless a hurricane knocked it down. The tax overhaul eliminated this deduction unless losses were the result of a federally declared disaster, such as hurricanes Michael and Florence in the Carolinas or the Camp wildfire in northern California.” [Kiplinger, 1/16/19]
The TCJA Eliminated The Job Search Expense Deduction. According to Kiplinger, “The Tax Cuts and Jobs Act lowered tax rates and nearly doubled the standard deduction, which is expected to reduce taxes for about 65% of taxpayers, according to the Tax Policy Center. But an estimated 29% of Americans will see no change to their tax bill, and 6% of you will pay more. If you’re one of the unfortunate taxpayers who don’t get a lower tax bill, it might be because the tax overhaul scrapped or capped some popular tax breaks. Here are 8 common tax deductions that were repealed or limited by the new tax law. […] These deductions included the write-off for tax preparation fees, investment fees, hobby losses, job search expenses, safe deposit boxes and unreimbursed business expenses. Previously, taxpayers could deduct these expenses if they exceeded 2% of their adjusted gross income.” [Kiplinger, 1/16/19]
Trump Tax Plan Sought To Eliminate Tax Deductions For Medical And Dental Expenses. According to the Detroit Free Press, “The Trump plan calls for eliminating all tax deductions on individual tax returns — except the deduction for home mortgages and charitable gifts. If you itemize, as many middle class families do, you're going to want to watch this potential change. […] But under Trump's plan, many tax deductions would vanish — including the deduction on medical and dental expenses, real estate taxes, casualty and theft losses, expenses related to tax preparation fees, expenses relating to job hunts, a deduction for the amount that individuals pay for state and local income taxes and the value-based portion of car registration fees.” [Detroit Free Press, 4/26/17]