Monday, August 31, 2015

GOP Freaks Out Over Trump’s Populist Tone on Raising Taxes

Donald Trump continues to be the number one spectacle in the GOP 2016 presidential clown car.  Now, he has the GOP establishment truly running scared: he is talking about the need to raise taxes on hedge fund managers and penalize corporations who use tax laws against what The Donald sees as America's best interests.  Such tax policies would cut directly against the GOP's efforts to give birth to a new Gilded Age.  Worse yet, they might educate some in the GOP base that voting Republican is against their own best economic interest.  Personally, I love it!  The New York Times looks at Trump's tax policy statements and the vapors and swooning amongst the establishment and nutty groups like the misnamed Club for Growth.  Here are excerpts:
For years, Republicans have run for office on promises of cutting taxes and bolstering business to stimulate economic growth, pledging allegiance to a Reaganesque model of conservatism that has largely become the party’s orthodoxy.

But this election cycle, the Republican presidential candidate who currently leads in most polls is taking a different approach, and it is jangling the nerves of some of the party’s most traditional supporters.

[Trump] would raise taxes in certain areas, particularly on corporations that he believes do not act in the best interests of the United States.  

Mr. Trump has threatened to impose tariffs on American companies that put their factories in other countries. He has suggested he would increase taxes on the compensation of hedge fund managers. And he has vowed to change laws that allow American companies to benefit from cheaper tax rates by using mergers to base their operations outside the United States.

The issue of taxing as ordinary income the compensation of hedge fund managers — a share of investment profits known as carried interest — played prominently during the 2012 presidential election. Financial disclosures revealed that Mitt Romney, the Republican nominee, had paid a relatively low tax rate over the years because he was earning retirement income in such a way from Bain Capital, a private equity firm.

Investment managers generally pay only a 15 to 20 percent capital gains tax on profits earned from their customers holdings, a treatment that Democrats often argue amplifies income inequality. Mr. Trump wants fund managers to “pay up.”

Mr. Trump’s ideas are not new. The Obama Treasury Department supports a detailed overhaul of the corporate tax code that involves taxing hedge fund and private equity compensation as ordinary income and sweeping changes to the way American corporations are taxed overseas.
By inserting the issues into the presidential campaign, Mr. Trump has turned an obscure effort on Capitol Hill into a potentially major fight in the national Republican Party.

Mr. Trump has also threatened to make companies like Ford “pay a price” for shifting their production abroad. And while he claims to be friendly with many of them, he has called hedge fund managers “paper pushers” who tend to get lucky on the road to riches. The populist tone is playing well with a subset of the Republican electorate that is frustrated with the status quo, but there are signs that Mr. Trump is beginning to alienate some in the party’s base.

Corporate inversions are another issue on which Mr. Trump’s positions have been slippery. This practice — companies acquire smaller overseas firms and move their headquarters to countries with lower taxes — has become increasingly popular, costing the United States billions of dollars in lost revenue and drawing the ire of Democrats in Congress.

No comments: