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Tiny Trump Hands Deliver Teeny Tiny Tax Plan, US Stocks Collapse in Despair

The big announcement of the really, really big Trump Tax Plan with the “biggest tax cuts in history” came out bigly on Wednesday, as Trump promised. Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn, Trump’s latest tax team, beamed proudly as they presented their baby. The stock market took a deep breath, then looked at their brainchild and completely petered out.

First, let me say, I clearly have nothing to recant from my earlier predictions about Trump’s tax plan. The plan that came out looks almost exactly as I thought it would — the only difference being that it is far more pathetic.

Some news organizations, getting a little ahead of themselves, talked about the US stock market taking off because of the Trump tax plan when the market first got wind that the plan had been released and heard some of the key points:

 

Once again, investors appear to be placing the bet that Good Donald Trump will be great for the market and that Bad Trump won’t be all that horrible. That was on display on Tuesday. The Dow Jones Industrial Average soared more than 230 points after it was reported that the White House’s tax plan, whose broad outlines will be announced on Wednesday, will propose cutting corporate tax rates to 15 percent, a Trump campaign pledge that many thought the president was backing away from. (Newsmax)

 

Ah, but that was this afternoon, and now it is the evening after the market plunged as steeply as it soared (and twice as far) to finish the day with the Dow slightly down from its pre-tax open — a sign of a mercurial market that was, for an instant pleased, until it started to feel a little indigestion from consuming its dinner too quickly. At that point, it barfed up all its gains for the day and went to bed sour.

What the White House billed in its release as “the biggest tax cut in history” rapidly turned into digestive gas. As I speculated earlier in the day, no real plan was released. Just gas. Once again the Trumpet blew his horn loudly (probably from his back side) as he released the big plan, and then his team turned out a summary statement, devoid of any details or calculations.

 

Here is my own summary of the Greatly Trumped-up Tax Plan:

 

  • The plan will eliminate estate taxes, which only the wealthiest Americans now play, helping Trump and family considerably in the future, but most of you not one iota. (This is a cut 100% for the rich, but it makes things equitable.)
  • The White House compensates for this by saying some other tax breaks that help the rich will be eliminated so that the plan would largely help the middle class; only, as usual, it doesn’t specify what those “other” current tax breaks are that will be eliminated. (So, read that as, “Just trust us on this one.”)
  • The new, new New Trump Tax Plan contains no math to show how much of a deficit the new plan will create, but co-creator Cohn offers assurances that the tax cuts “will pay for themselves” through economic growth and that the president knows we have to “be good stewards.” (“Just trust us on that one.”)
  • The plan comes with Cohn’s personal assurance that the president “will get this done for the American people.” (I feel better knowing that assurance is still being offered as it was in past months. I do note, though, that missing their stated and revised schedules during those months now leaves them simply assuring us it will still get down, but without anymore undoable deadlines.)
  • Corporate taxes will fall from 36.9% to 15%. (That will include closely held businesses and limited partnerships, like legal firms, construction companies in the oil industry, and … real-estate companies, where business income largely passes through to the owners (sometimes the family) so the business does not pay the tax but the owner does when the money passes through. (In other words, the bulk of Trump’s income tax — and his children’s — will drop from 35% to 15%, except that the plan comes with a footnote that this will be done in such a way as to insure that wealthy Americans do not exploit the change. So, we’re good! Oops, maybe not, this huge tax cut also will apply to hedge-fund managers, whom Trump promised during his campaign to tax at a higher rate.)
  • The plan reduces the number of tax brackets to three simple levels (10, 25, and 35 percent), and states the tax rate of each bracket. (Unfortunately, it omits stating what income levels will apply to each bracket.)
  • The plan comes with a note that details will be hashed out with the House of Representatives and the Senate in coming weeks. (Maybe months? Like the Obamacare repeal details got hashed out … of existence?)
  • “We know this is difficult,” Cohn said. “We know what we’re asking for is a big bite.” (That’s a plus because with Obamacare, “who could have thought it would be this difficult?” At least, now they’ve learned it is difficult. They have learned something on the job, so we can feel good about having a smarter team.)
  • It does help some of the middle-class by doubling the standard deduction for married couples, and it maintains the allowance for charitable deductions, and it says it will allow tax relief for childcare expenses (though, again, without any details).
  • The plan promises to alienate anyone who lives in a state with high state income tax by making state income tax no longer deductible. (No help if you’re not in such a state, and a bite in the butt if you are; but the plan softens this news by noting that this effects higher income people the most — well, yeah, the ones unlike Romney and Trump who have been known to pay no state income tax.)
  • The plan simplifies tax code (albeit it doesn’t tell us how, just that it WILL). This will presumably happens when congress actually sits down to create the plan with laws under Trump’s instruction that the laws be more simple. (Trust us on that one, even though everything we’ve simplified so far has been ruled unconstitutional in a court of law or died in debate.)
  • Repatriated corporate profits will get a one-time major tax reduction, but all profits made overseas after that will be completely tax free for years to come! (That’s a glory-hallelujah! Well, except for the detail that the tax rate for repatriation is omitted. But, hey, at least they’re thinking about it! And they’re gonna do something! Those cuts will be the “biggest in history!” We just don’t get to know how big until they figure that out. Details.)
  • One thing that is NOT mentioned in the Trumped-up Tax Plan is capital gains tax. If the lack of mention means there will no longer be a special capital-gains tax rate, the elimination of that gift, which goes largely to rich stock and real-estate speculators who can pay to play in that realm, is something I will like. (But the plan doesn’t say one way or another, and you can be sure Republicans will insist on putting that objectionable trickle-down part in as details are “hashed out.”)

 

Fine print: “details to be determined.”

 

Wouldn’t you know it? The one part where the devil always rests is still cloaked under a sheet to be revealed at some vague later date.

Written on all of one side of one page, the newly Trumped-up Tax Plan looks like a scheme worked out by a couple of guys in a paneled club room, smoking cigars over whisky on the rocks and deciding what sounds “great.” That’s clearly why the US stock market plunged once the cigar smoke cleared so investors could actually see the Trumped-up Tax Plan … and the napkin it was written on. How pathetic is that plan when it gives the “biggest tax cuts in history” all aimed at pumping up the stock market, and all its coming-out accomplishes is to cause the stock market to slump in disappointment? Talk about an anti-climax.

I think Trump announced, “We’re going to present our tax plan on Wednesday,” and his two tax boys said, “Yikes, we better get the plan laid out. Let’s meet tonight after work for drinks and draw something up, and then we’ll give it one of our secretaries to make it look nice.”

Where we got Trumped on this plan was in thinking a plan might actually be coming out today!

Hah! Silly us! It’s more of a promissory note, really. I’ve seen footnotes larger than this plan. What we got today was, again, nothing more than just talk! Talk about what Team Trump WILL do … whenever it is that it finally does it. They’ve managed to finish a one-page outline. I think the market rose when it heard general statements about the plan, then plunged all the way to closing when it saw that it was written with lots of white space and NO detail on one page. What the market first thought were summary statements introducing the plan, actually are the plan. Great work for your first hundred days, Boys!

Read my last article, “You Got Trumped! Trump tax plan taxing for the maestro of negotiation?” and you’ll see I sure called this one. If there is anything that has gotten to be predictable about Trump, it’s that he’s all talk all the time. He’s appropriately named after his loud and brassy mouth. Now, if he can just get his band of merry boys to orchestrate a tune. Trump promised the plan would be beautiful, and it is that; it’s written on a lovely piece of paper — very high quality like the menu at Mar-A-Lago — in an attractive font. It’s a thing of beauty. You should see it. Really, you should see it. I think it even has a picture of chocolate cake on it!

As for the timing of the new plan, Marc Short, Trump’s director of legislative affairs sought to lower expectations with the plan’s release today:

 

In the coming weeks, Trump will solicit more ideas on how to improve it, Short said. The specifics should start to come this summer.

 

Should start to come in? Sometime this summer we should START to see the specifics. After that comes all the arguing in congress about the specifics, which, then, get respecified, as they did with Obamacare because none of this plan has been presented to Democrats, and I find it highly doubtful Republicans can get an entire revision of the tax code done through the more simplified “reconciliation” process that doesn’t allow filibusters. When asked whether or not he’s reached out to moderate Democrats for input on the plan, Cohn only said he “hopes Democrats won’t get in way.”

Hmm. I’m thinkin’ they will. They’re like that. This is a dream plan only in the sense that the White House is dreaming if they think this is going to become a bill that revises the whole tax code without Democrat involvement. But, who would have thought that tax reform could be so difficult? Right?

 

 

Here is the actual plan if you want to read something truly pathetic after months of waiting:

 

It’s so full of vague platitudes or catch phrases that it’s practically a tax cliché.

 

2017 Tax Reform for Economic Growth and American Jobs

The Biggest Individual And Business Tax Cut in American History

Goals for Tax Reform

 Grow the economy and create millions of jobs

 Simplify our burdensome tax code

 Provide tax relief to American families—especially middle-income families

 Lower the business tax rate from one of the highest in the world to one of the lowest

Individual Reform

 Tax relief for American families, especially middle-income families:

• Reducing the 7 tax brackets to 3 tax brackets of 10%, 25% and 35%

• Doubling the standard deduction

• Providing tax relief for families with child and dependent care expenses

 Simplification:

• Eliminate targeted tax breaks that mainly benefit the wealthiest taxpayers

• Protect the home ownership and charitable gift tax deductions

• Repeal the Alternative Minimum Tax

• Repeal the death tax

 Repeal the 3.8% Obamacare tax that hits small businesses and investment income

Business Reform

 15% business tax rate

 Territorial tax system to level the playing field for American companies

 One-time tax on trillions of dollars held overseas

 Eliminate tax breaks for special interests

Process

Throughout the month of May, the Trump Administration will hold listening sessions with stakeholders to receive their input and will continue working with the House and Senate to develop the details of a plan that provides massive tax relief, creates jobs, and makes America more competitive—and can pass both chambers.

 

If you voted for Donald Trump, you got trumped

Trumped you!

In other words, it is a plan to start creating a plan!

And you thought I was just joking about how vague and utterly deplete of details this so-called plan is! After six months of poring over the details and laboring late into the nights, this fourth rendition of Trump’s plan is not that different from what he presented during the campaign, and it’s equal in depth of thought and detail to the kind of outline you come up with after a day of brainstorming and sorting out the the most-liked ideas.

Now that Team Trump has done all the heavy lifting, it falls to congress to turn this masterplan into months of argument and volumes of law.

I knew it was going to be pathetic; I didn’t know it was going to be deplorable.

  • Auldenemy

    Well, you predicted the, ‘Yuugely’, ‘Bigly’ tax announcement was going to be another blast of Trumphony hot air and have been proved correct.

    I don’t think I have ever seen such a badly constructed tax plan ever! It comes across as having been constructed by a group of High School kids. It is so vague in terms of changing anything for ordinary Americans; a hope rather than a promise. It is so lacking in any detail and commitment and so poor in construction that maybe Jared produced this! I think it went like this:

    Trump is sitting in the Oval Office while his hairdresser attends to his comb-over. Ivanka is sat close by, idly looking at ‘Hello’ magazine on her ipad and fuming that she isn’t in every edition of it.

    TRUMP: “What ya doin’ ‘Vanky honey?”

    IVANKA: Sighing. “Nothin’ Daddy, just waitin’ on ma nails ta dry”

    TRUMP: Sensing his beloved daughter is bored and fed up. “Hey Vanky, I know
    you miss Jared yuuugely honey but he is doin’ bigly business things in
    Israel and it’s gonna be awesome”.

    IVANKA: “I know Daddy, I just miss him is all. Next to you he is the most bigly
    thing in ma whole life”.

    TRUMP: “Ye, but he won’t ever be as bigly as me honey. No one will. No one in
    the history of the world has been as bigly as me, not even Jesus.”.

    IVANKA: “I know Daddy. I know”

    TRUMP: “Honey. Before Jared flew off to the Land of Zion did he write out that
    yuuugely, bigly tax plan I asked him to come up with?”

    IVANKA: “Sure he did Daddy. You know how your wish is Jared’s command. He
    wrote it out in under 5 minutes on the back of an envelope for you. I
    got it right here, in my handbag”.

    She proceeds to empty out a pile of gold and platinum credit and store
    cards from her bright orange, Italian designer handbag and finally
    produces a crumpled envelope covered in spidery handwriting
    with lots of spelling mistakes and crossed out words. Beaming with
    pride Ivanka hands it to her father. Trump flicks a hand in the air to
    usher away the hairdresser. He struggles to read the wording on the
    envelope so gives up trying.

    TRUMP: “That’s great honey but I’m kinda busy with the nut job in North Korea
    so I gotta make another call to the little Chinese guy I had chocolate
    cake with the other week. I want you to take this envelope to Mr
    Munchkin next door and tell him I said to get it typed up and I want
    it released tomorrow so the American people know I am truly
    making America great again. Oh, and make sure Vanky that it covers
    tax breaks to property owners and cancels the death tax. We gotta
    think about the family first”

    IVANKA: Smiling. “Sure thing Daddy Bigly! Oh, and is Mr Munchkin a real
    Munchkin like out of the Wizard Of Oz?”

    TRUMP: Smiling. “He sure is honey and I am the Wizard Of Oz!”.

    Footnote. Trump has never been able to spell or pronounce, ‘Mnuchin’ properly.
    Nor has Ivanka. So the poor little bankster is damned for life to be
    a, ‘Munchkin’.

    Multum In Parvo

    • So, now we know you are the one who has been wiretapping the White House.

      • Auldenemy

        Damn it, you sussed me out! Now you have blown my cover, I expect helicopter gun ships to arrive in the surrounding fields with SWAT teams racing towards my humble abode. No doubt I will be extradited to the USA and sent to Guantanimo. Or maybe they will do what Hillary suggested for Assange and just drone me.

        • Probably all of the above. I mean why give you less than the full enchilada? They’ll drone you (to make sure they get you by surprise), shoot you with gun ships (for public shock and awe), and then send your body to Guantanamo (for safe keeping and torture practice).

  • Kim

    Mr. H, don’t ya know, bullet points decomplexify the reading burden for we deplorables. We can just zip right through bullets points, we don’t even have sit down for bullet points.

    Don’t fret, Goldman Sach’s is here to explain the bullets points to us:

    “It’s just a slight revision, which appears to make incremental changes (*please, stay with me, here), to the campaign proposal (it’s just a proposal, not a promise, don’t get confused, now) just to eliminate a few of the differences between the campaign plan (we just went from a proposal to a plan), and the House Republican blueprint on tax reform. The White House still appears “likely” to continue on this tax cut path, relying on “optimistic growth assumptions to offset most of the fiscal effects of the proposed tax cut. . . ”

    Jebus. I think I’ll watch some All In The Family reruns.

    • Goldman sucks. (But, hey, they’re in charge of everything now. That’s the price they pay for helping destroy the global economy the first time around. They get put in charge of fixing it. And the fix is in.)

      Let me know when the T.V. set warms up (like they had to back in the day of All in the Family), and we’ll watch together.

      –David