Trump’s Capital Gains Tax Cut: A Midnight Gift for the Country Club, Wrapped in a Midterm Bow

Funny how every election year, the same crowd in Washington discovers a burning passion to cut your taxes. And funny how, when you read the fine print, it turns out “your taxes” means their taxes.

President Trump is floating a capital gains tax cut as a midterm sweetener. National Economic Council Director Kevin Hassett went on Fox Business Tuesday to tell Larry Kudlow, of all people, that Trump wants to “offer voters more incentives” to back Republicans in November. Translation: the White House needs a shiny object to wave in front of voters who are starting to ask uncomfortable questions about the economy, and a tax cut polls well even when most of the people hearing about it will never see a dime.

Shealeah Craighead (Public domain) via Wikimedia Commons

Here is what they are not telling you. On August 13, Trump pledged to cut the top federal capital gains rate to 15 percent. The Institute on Taxation and Economic Policy ran the numbers and found that 99 percent of the benefits would flow to the richest 1 percent of taxpayers. Not 60 percent. Not 80. Ninety-nine. You do not need to be a CPA to understand what that means. If your taxable income is below $441,450 as a single filer, you already pay 15 percent or zero on long-term capital gains. This cut does nothing for you. Nothing. It is a check written to people who were never going to vote for the other team anyway, dressed up as a middle-class rescue plan.

The tax break on capital gains alone would be worth roughly $300 billion over a decade. Three hundred billion. For the top 1 percent. Ask yourself who benefits from that, and then ask yourself why they need Hassett to go on television and sell it to you like it is your birthday present.

Brookings, which is no friend of the populist movement, nonetheless crunched the numbers and concluded that cutting the top capital gains rate would “spur tax shelters, generate little new saving, give a windfall to the wealthy, and make long-term budget problems even worse.” About three-quarters of all capital gains are realized by 3 percent of households earning over $100,000. The people who actually need help are not in that club. They are working overtime and hoping the grocery bill stays under $200 this week.

usbotschaftberlin (Public domain) via Wikimedia Commons

Now, there is a piece of this plan that actually makes sense. Trump is also talking about an exemption for certain home sales. That is real. That helps actual families who want to sell a house without getting punished for it. Brookings even agreed on that one, noting it would simplify compliance at virtually no cost to the Treasury. So buried under the yacht subsidy is one honest provision for the little guy. Funny how that works. They always give you just enough to feel included.

The budget agreement already commits the President and Congress to cut capital gains taxes. So this is not a fresh idea. It is a done deal looking for a marketing campaign. The midterms are the excuse. The donor class is the audience. You are the backdrop.

I am not against tax cuts. I am against tax cuts that are sold to working people on the theory that they will somehow trickle down to the kitchen table. They never do. The last round of cuts did not fix your wages. The round before that did not either. And this one, by design, cannot. It is structured to bypass 99 percent of the country on the way to the people who already have everything.

Gage Skidmore from Surprise, AZ, United States of America (CC BY-SA 2.0) via Wikimedia Commons

The establishment runs this play every cycle. They cut a deal with the donor class, wrap it in a flag, hand it to a talking head on a business channel, and tell you it is freedom. And then November comes, and your property taxes go up, and your insurance goes up, and the guy who just saved $40 million on his stock portfolio tells you the economy is booming.

Ask yourself who benefits. The answer is never you.