News & Politics

Paul Krugman: Trump Is Lying Through His Teeth About Your Taxes

The president wants us to believe we pay huge rates and that cuts spur growth. It's all hooey.

Photo Credit: YouTube Screengrab

Republicans love a fairy tale. In their world of make-believe, there is no wage gap, corporations are benevolent and Christians are the biggest target of religious discrimination. The tallest of their tales, however, centers around taxes. As Paul Krugman notes in his Monday column, "Made-up sob stories about family farms broken up to pay inheritance taxes, magical claims about self-financing tax cuts, and so on go all the way back to the 1970s."

The Trump administration has allowed these lies to multiply and gain strength. To help the rest of us non-economists sort tax fact from fiction, Krugman has created a field guide to the top 10 GOP tax lies. Here are five of the Republican Party's biggest whoppers.

1. Myth: America is the most highly taxed nation in the world.

This may be Donald Trump's favorite falsehood. An army of fact-checkers fights it every time, but it never seems to matter. As Krugman writes, "he enjoys showing that he can lie repeatedly through his teeth, be caught red-handed in his lie again and again, and his followers will still believe him rather than the 'fake news' media."

2. Myth: The estate tax is destroying farmers and truckers.

This has been a GOP narrative since at least the 1970s. And while Krugman acknowledges there may somewhere exist a family farm that has been overtaxed, "advocates of estate tax repeal haven’t been able to come up with a single example at least since the late 1970s, when exemption levels were raised to the equivalent of around $2 million in today’s dollars."

Trump now likes to claim it's truckers who suffer, because "who among us doesn’t own an $11 million fleet of trucks?"

"Only a small number of very large estates pay any tax at all," Krugman writes, "and only a tiny fraction of those tax-paying estates are small businesses or a family farm."

3. Myth: Taxes won't increase the deficit, and spur economic growth.

You don't need to be a Nobel Prize-winning economist like Krugman to know that "big cuts in corporate taxes, elimination of the estate tax, lower rates on high-income individuals, and a massive new tax-avoidance loophole," won't exactly appease deficit hawks. The only possible way this could work is if this new tax proposal eliminated a ton of existing deductions, and that's likely a nonstarter with House Majority Leader Paul Ryan. Trump, meanwhile, is working diligently to revive the central myth of the Reagan administration: that tax cuts on the rich trickle down to the poor, increase spending and in no way bleed essential government services dry. 

4. Myth: Taxation of pass-through entities is a burden on small businesses.

What we usually think of as a corporation, Krugman notes, is not really a corporation at all. In fact, "they’re partnerships, sole proprietorships, and S corporations whose earnings are simply 'passed through': counted as part of their owners’ personal income and taxed accordingly. Trump wants to change that, and let owners simply pay a 15 percent tax on the earnings of pass-through entities, with no further taxes owed."

Trump would have us believe that this is somehow a gift to small businesses. But as both Krugman and the Tax Policy Center point out, "many middle-income households who own pass-through entities aren’t running businesses; they generally derive only a small fraction of their income from these entities." They might get a little from renting out a vacation home, or even from selling clothing on eBay, but that's chump change. The doctors, lawyers and hedge fund owners would be making even more of a killing. So, "this isn’t a tax break for small business, it’s a tax break for, surprise, wealthy individuals." 

5. Myth: This is not a tax cut for the rich.

The three major pillars of the Trump tax plan are: cut corporate taxes, pass through tax cuts and eliminate the estate tax. "All of these," Krugman notes, "strongly favor very high incomes—and everything else is small change." 

"The administration is making lots of assertions about what its plan will do, with apparently no more information than the [Tax Policy] center," he continues. "Furthermore, given the general shape of the plan there’s no way it can fail to be very much a gift to the already very rich." 

These five only scratch the surface of the misinformation Trump and his lackies are spreading. For the full alternative facts experience, read the entire column.

Ilana Novick is an AlterNet contributing writer and production editor.

Sign Up!
Get AlterNet's Daily Newsletter in Your Inbox
+ sign up for additional lists
[x]
Select additional lists by selecting the checkboxes below before clicking Subscribe:
Activism
Drugs
Economy
Education
Election 2018
Environment
Food
Media
World