Voters Say NO To Trump's Proposed Tax Cut Plan

Polls have shown that voters would support a plan to cut taxes. But they want those tax cuts targeted at middle class and low income people. And they don't like the tax cut plan proposed by Donald Trump.

A new poll shows that only 30% of the public supports Trump's plan, while 52% oppose it. Why? because they see the plan as benefitting the rich -- not the people that actually need a tax cut. About 63% say Trump's plan would benefit the wealthy the most, while only 27% think it would benefit the middle class and a scant 4% think it would benefit those with a low income.

That is simply not the kind of tax cut plan the public wants. While Trump's plan would benefit the rich and the corporations far more than anyone else, the public opposes that. About 55% say corporate taxes shouldn't be cut to 15%, and a whopping 77% say there should be no tax cut for the rich.

Americans want a tax cut. They just don't want the cuts proposed by Donald Trump.

These charts were made from information in a new Quinnipiac University Poll -- done between May 4th and 9th of a random national sample of 1,078 voters, with a 3 point margin of error.

There Are 2 Tax Systems - One For The Rich And One For Us

(Cartoon image is by Dave Granlund at davegranlund.com.)

If you listen to the Republican politicians, you might be convinced that the rich in this country are overtaxed (and need another tax cut). That is not even remotely true. The rich are currently paying less in taxes than at any time since World War II. Part of it is because their income is taxed differently than that of working Americans (taxed at a lower "capital gains" rate, instead of the "earned income" rate paid by most Americans).

But that is just part of the problem. Their ability to hire an army of CPS's and tax lawyers, and the ability to hide money overseas, has resulted in them paying a lower percentage of their income in taxes than most in the middle class must pay. This has created, in effect, a different tax system for the rich than is applicable to ordinary Americans.

The New York Times has written an excellent article on this. I post only a portion of it below, but I urge you to read the whole article. It is quite shocking.

With inequality at its highest levels in nearly a century and public debate rising over whether the government should respond to it through higher taxes on the wealthy, the very richest Americans have financed a sophisticated and astonishingly effective apparatus for shielding their fortunes. Some call it the “income defense industry,” consisting of a high-priced phalanx of lawyers, estate planners, lobbyists and anti-tax activists who exploit and defend a dizzying array of tax maneuvers, virtually none of them available to taxpayers of more modest means. . .

Operating largely out of public view — in tax court, through arcane legislative provisions and in private negotiations with the Internal Revenue Service — the wealthy have used their influence to steadily whittle away at the government’s ability to tax them. The effect has been to create a kind of private tax system, catering to only several thousand Americans.

The impact on their own fortunes has been stark. Two decades ago, when Bill Clinton was elected president, the 400 highest-earning taxpayers in America paid nearly 27 percent of their income in federal taxes, according to I.R.S. data. By 2012, when President Obama was re-elected, that figure had fallen to less than 17 percent. . .

The ultra-wealthy “literally pay millions of dollars for these services,” said Jeffrey A. Winters, a political scientist at Northwestern University who studies economic elites, “and save in the tens or hundreds of millions in taxes.”. . .

While Democrats like Bernie Sanders and Hillary Clinton have pledged to raise taxes on these voters, virtually every Republican has advanced policies that would vastly reduce their tax bills, sometimes to as little as 10 percent of their income.

At the same time, most Republican candidates favor eliminating the inheritance tax, a move that would allow the new rich, and the old, to bequeath their fortunes intact, solidifying the wealth gap far into the future. And several have proposed a substantial reduction — or even elimination — in the already deeply discounted tax rates on investment gains, a foundation of the most lucrative tax strategies. . .

Each of the top 400 earners took home, on average, about $336 million in 2012, the latest year for which data is available. If the bulk of that money had been paid out as salary or wages, as it is for the typical American, the tax obligations of those wealthy taxpayers could have more than doubled.

Instead, much of their income came from convoluted partnerships and high-end investment funds. Other earnings accrued in opaque family trusts and foreign shell corporations, beyond the reach of the tax authorities. . .

Organizing one’s business as a partnership can be lucrative in its own right. Some of the partnerships from which the wealthy derive their income are allowed to sell shares to the public, making it easy to cash out a chunk of the business while retaining control. But unlike publicly traded corporations, they pay no corporate income tax; the partners pay taxes as individuals. And the income taxes are often reduced by large deductions, such as for depreciation. . .

The wealthy can also avail themselves of a range of esoteric and customized tax deductions that go far beyond writing off a home office or dinner with a client. One aggressive strategy is to place income in a type of charitable trust, generating a deduction that offsets the income tax. The trust then purchases what’s known as a private placement life insurance policy, which invests the money on a tax-free basis, frequently in a number of hedge funds. The person’s heirs can inherit, also tax-free, whatever money is left after the trust pays out a percentage each year to charity, often a considerable sum.

Many of these maneuvers are well established, and wealthy taxpayers say they are well within their rights to exploit them. Others exist in a legal gray area, its boundaries defined by the willingness of taxpayers to defend their strategies against the I.R.S. Almost all are outside the price range of the average taxpayer. . .

The combination of cost and complexity has had a profound effect, tax experts said. Whatever tax rates Congress sets, the actual rates paid by the ultra-wealthy tend to fall over time as they exploit their numerous advantages. . .

“We do have two different tax systems, one for normal wage-earners and another for those who can afford sophisticated tax advice,” said Victor Fleischer, a law professor at the University of San Diego who studies the intersection of tax policy and inequality. “At the very top of the income distribution, the effective rate of tax goes down, contrary to the principles of a progressive income tax system.”. . . 

For the ultra-wealthy, “our tax code is like a leaky barrel,” said J. Todd Metcalf, the Democrats’ chief tax counsel on the Senate Finance Committee. ”Unless you plug every hole or get a new barrel, it’s going to leak out.”

Corporations Avoiding Billions In Taxes

This is something that will (or at least should) make you mad as you start to prepare your own taxes. While you pay your taxes as you are supposed to, following the law, the huge corporations in this country are hiding much of their income in other countries -- just so they don't have to pay any American taxes on it. And many of these companies have opened an office in some of those countries (like the Cayman Islands or Bermuda) just for the purpose of tax evasion.

And we're not talking about small amounts of money either. The Wall Street Journal and the Bloomberg News, both conservative business-oriented news organizations, have come up with some figures showing how pervasive this hiding of profits has become.

The Wall Street Journal says that the largest 60 American corporations moved about 40% of their total profits offshore last year (approximately $166 billion dollars) simply to avoid paying taxes on it. That's a pretty hefty chunk. Imagine how much better your own tax bill would look if you could get away with hiding 40% of your income, and only paying taxes on the other 60%!

Bloomberg found a similar thing when they looked at offshore tax evasion. They found 83 corporations that had moved $183 billion offshore just in the last lear. These 83 corporations are now sitting on at least $1.46 trillion dollars in those offshore accounts -- successfully avoiding tens of billions of dollars in both federal and state taxes. If those corporations had just paid their fair share of taxes, the sequester would never have had to happen.

This also exposes another lie that corporations (and their Republican puppets) have been telling Americans -- that the corporations can't afford to create jobs because their taxes are too high. The truth is that the trillions of dollars they have stuffed overseas could have been brought back and used to create jobs (which would then be an expense which taxes wouldn't be paid on), but they didn't. That's because they know that low taxes don't help job creation (and high taxes don't hurt it). Jobs are created only when businesses need to hire to meet increasing demand.

Of course, they are still telling the lie. In the last Congress, the Republican tried to create a "tax holiday" for the corporations -- allowing them to bring that offshore money back and not pay any tax on it (or only pay a tiny tax). They claim it will allow them to create jobs. We know better. It will just let them fatten their bank accounts without paying taxes -- something the middle and working classes would never be allowed to do.

Trillions Hidden In Foreign Bank Accounts

This is a story that should make most Americans (regardless of political party) very angry. If it doesn't anger you, then you are either among the filthy rich or completely brain-dead. The Tax Justice Network has just released a report on money hidden in offshore bank accounts (in places like Bermuda or the Cayman Islands) to avoid paying taxes. The report was written by James Henry, a former chief economist at the international consulting firm McKinsey & Company.

Using information from the International Monetary Fund, the World Bank, the Bank of International Settlements, and many national governments, Henry estimates that at least $21 trillion (yes, that was TRILLION) is being hidden in secret, tax-free, foreign bank accounts to avoid paying taxes. That's more money than the total economies of the United States and Japan combined. And that may be a lowball number -- the figure could be as high as $32 trillion.

Now all of this money does not come from rich tax-dodgers in the United States (about $800 billion has left Russia since 1990), but a large hunk of it is from this country. Just imagine, if this money had been taxed at a conservative 30% rate it would have yielded an additional $6.3 trillion in revenue for the countries it came from (and taxed at only 20% would have yielded an additional $4.2 trillion), and it could be even more. That money could have kept a lot of countries from having to invoke "austerity" programs, cutting aid to their most needy citizens.

And one of those hiding much of his money in overseas accounts to avoid paying U.S. taxes is Republican presidential nominee Willard Mitt Romney (aka Wall Street Willie). We know he has accounts in the Cayman Islands, Bermuda, Switzerland, and several other foreign countries in "tax havens". What we don't know is just how much money he is hiding overseas -- he could be worth much more than the $250 million he admits to. And since the accounts are secret, we also have no idea how many millions of dollars in U.S. taxes he has dodged.

Now Romney will claim that he is doing nothing illegal by keeping secret funds in these accounts, and he may be right. But it should be illegal, and it most certainly is unethical -- especially in this recession where millions live in poverty and millions more are in danger of falling into poverty through unemployment (and falling wages). While most Americans declare all of their income and pay their appropriate tax on that income, it is just not right that Romney (and other super-rich people) are able to dodge their taxes by hiding money in overseas accounts.

Remember this when you go to the polls next November. By voting for Romney, you will be saying it is OK for the super-rich to evade paying taxes by hiding money overseas. Is that really what you believe? Do you really want a tax evader (who refuses to release his tax returns) as President of the United States?

What Is Wall Street Willie Trying To Hide ?

It is becoming more and more obvious with each passing day, that one presidential candidate is being open & honest about the income and financial affairs of he and his wife -- and the other presidential candidate is not. As the top chart shows, President Obama has released his tax returns for the last 12 years. But Willard Mitt Romney (aka Wall Street Willie) has not even come close to that. He has released his return for only one year (and an "estimate" of another year). Why?

It's not like other Republicans didn't release their own tax returns for several years. Most of Romney's Republican opponents did so, and they all asked for Romney to do the same. Hell, even Romney's own father, George Romney, released 12 years of tax returns when he ran for president. But then Romney's father paid his fair share of taxes, and did not try to dodge paying taxes by hiding money in overseas accounts.

But Mitt is not his father. As the bottom chart above shows, Mitt has hidden money in at least seven other countries, and in six of those overseas accounts he has refused to even reveal how much money he has in the accounts. Why won't he reveal his finances? Why won't he reveal his tax returns? Is it something as simple as he doesn't want Americans to know just how truly wealthy he is -- that the $250 million he admits to is only the tip of his financial iceberg?

Or is it something much more sinister -- like tax evasion? We already know he paid a lower tax rate on $21 million in income in 2010 than most middle class Americans must pay on only a 5-digit income. Could he have made much more than $21 million and hid it in the overseas accounts (many of which are notorious for being havens for tax-dodgers) to avoid paying taxes in America? His refusal to release his tax returns or his financial information makes that seem highly likely.

Last Tuesday Senator Lindsey Graham (R-South Carolina) tried to cover for Romney by saying "it's really American to avoid paying taxes, legally". That's a ridiculous statement -- and one that should anger most Americans. Very few Americans (and none that aren't super-rich like Romney) have overseas accounts and refuse to reveal what is in those accounts. And most Americans pay their taxes without trying to hide anything. In fact, the majority don't even itemize deductions -- using either a 1040EZ or a 1040A form which allows only the standard deduction. Romney (and Graham) may be tax evaders, but most Americans are not. They may not be happy about it, but they honestly pay what they owe. Here's how the New York Times puts it in their editorial:

"Paying taxes forthrightly has long been a matter of civic pride for most American politicians, a demonstration of honesty and of a willingness to share in society's burdens. Since the Watergate era, presidential candidates have released several years of tax returns, allowing voters to peer at their financial choices and discern their entanglements."

"Mitt Romney has upended that tradition this year. He has released only one complete tax return, for 2010, along with an unfinished estimate of his 2011 taxes. What information he did release provides a fuzzy glimpse at a concerted effort to park much of his wealth in overseas tax shelters, suggesting a widespread pattern of tax avoidance unlike that of any previous candidate."

The United States has never had a president who hid a large part of their wealth in overseas bank accounts (whether it is a scheme to avoid taxes or not), and this is not the time to elect one -- especially in the middle of this jobless recession when millions of Americans are having trouble just making ends meet financially. The president should be a shining example for other Americans in paying taxes -- not a person who hides his wealth and dodges paying his taxes by using overseas accounts.

Romney Got Rich Off "Island" Tax Shelters

Presidential candidate Mitt Romney is by far the richest candidate in the race, regardless of party. He is worth approximately $250 million, qualifying him as one of the "super-rich".

He likes to brag about his business acumen, and how that sharp business sense helped him to take his company (Bain Capital) to the top. But you won't hear him talk much about exactly how he accomplished this feat. That's because most Americans probably wouldn't like it.

Most Americans pay their taxes, and don't like it when others use tax shelters and other loopholes to avoid paying the taxes they owe. It doesn't look like Romney broke any laws, but he did set up shell companies in Bermuda and the Cayman Islands. These companies were used to allow investors to funnel money through them and into Bain Capital.

This allowed the investors to completely avoid paying any United States income taxes. By using these tax-avoidance schemes, Romney was able to draw billions of dollars of investments into Bain Capital, and not a penny of the money his investors earned were subject to income taxes.

It was legal, but not very ethical -- not when you consider that these tax shelters force a larger part of the tax burden on the middle and working classes, who actually pay their taxes.

Romney likes to brag about how religious he is, but this doesn't sound very "christian" to me. Didn't Jesus say to render unto Ceasar that which is Ceasar's? In other words, pay the government that which it is due. I don't remember any addendum that said "unless you can create a loophole and avoid that rendering".

Once we know about the Island shell companies, who have no employees -- only a mail box, it is easy to see how Romney amassed his vast fortune. He did it on the backs of American workers.