The notion that the Trumptards who supported and still support the Red Queen think he is some populist godhead leader is beyond the pale. Last year, he teamed up with his kleptocratic allies to deliver a tax plan that was hyper pro-oligarch and nasty in extremis.
To review, that plan slashed taxes for the top 1% of taxpayers. Heads of uber-wealthy households raking in more than $440,000 a year saw their rate reduced to from 39.6% to 35%. Repeal of the alternative minimum tax saves even more for the 1%. Those in the upper-income bracket of $213,000 to $417,000 per year get a rate reduction from 33% of earning to 25%. Yet, the 25% tax-rate bracket remains the same for America’s core lower-middle to upper-middle income households earning $50,801 to $131,200 a year.
Estate taxes are eliminated altogether. This benefits those inheriting more than $5.45 million. The blue line in the 2015 wealth distribution chart is going parabolic. Important distinction: This is actually the top 0.1%, not the 1%.
The corporate tax rate and the pass-through business tax was cut to 15%. The current rate structure produces a flat 34% tax rate on businesses earning from $335,000 to $10 million, gradually increasing to a flat rate of 35% on earnings above $18.3 million. The cost of this move is $3.7 trillion over 10 years. According to the Treasury, 43% of corporate tax is paid for by the top 1%.
Add the territorial system with a one-time tax on overseas profits. This is repatriation of profits parked overseas. This neo-liberal scheme is being used for stock-price manipulation and buybacks, not capital investment and so-called re-industrialization.
Now we have a new Trumpenstein proposal to “help” his kleptocrat sidekicks: a $100-billion unilateral tax bypassing Congress with “a legally tenuous maneuver that would cut capital gains taxation.” This is a one-time inflation-adjusted long-term cost basis when calculating capital gains tax.
This new kleptocrat tax proposal came 24 hours after the UST said it expects to borrow $56 billion more during the third quarter than previously estimated. This means $329 billion in net marketable debt will be issued from July through September. UST also forecasts $440 billion of net borrowing in the final three months of 2018. This does not include existing debt that needs to be rolled over on maturity by holders such as China.
Keep in mind that the Fed is reducing its balance sheet by $120 billion during this July-September period. This goes to $150 billion from October-December. Little wonder Red Queen is starting to pressure, hammer and set up his scapegoat, Fed chief mucky muck Jerome Powell, for his puny and token interest-rate increases.
Overnight, Bloomberg reported that the Trump administration is set to increase a proposed 10% tariff on $200 billion in Chinese imports to 25%. If enacted, it would mean overall tariffs of $505 billion on Chinese imports.
Does this dry-fuel soaked kindling and confluence of lunacy set the table for a fat-finger sell order from this particular U.S. Treasury holder? Russia, with a smaller stash, has already cleared out of Dodge.