WASHINGTON — For months, the White House boasted the rich would not benefit from its tax plan. Now they're singing a different tune.
Depending on the moment, the president and top aides have described the Republican plans in two very different ways: as a Robin Hood scheme that takes from the rich and gives to the middle class, or as a bonanza for CEOs that cuts taxes for the wealthy as well.
President Donald Trump has led the shift in rhetoric. In the run-up to tax reform, he regularly boasted about his willingness to raise taxes on billionaires like himself and use the money to help others down the ladder.
"I am willing to pay more, and you know what, the wealthy are willing to pay more," he said in a May interview on ABC News. In September, he told a crowd that his tax plan was "not good for me, believe me" and said "there's very little benefit for people of wealth." Instead, he said, the benefits would go to "low-income and middle-income households."
This kind of talk was a break from typical partisan fights over taxes, where Republicans often argued that lowering top tax rates would promote higher growth and fairness, while Democrats countered that it would worsen inequality. When it came to individual taxes, Trump spoke the language of redistribution.
But the bills under consideration in Congress bear little resemblance to his claims. And the president has changed his message as well: He's now publicly demanding that Republicans cut taxes on the wealthy even further by lowering the top tax rate to 35 percent and complaining to Democratic senators he’ll "get killed" financially unless they repeal an estate tax that affects the top 0.2 percent of inheritances.
The House bill that passed on Thursday could save Trump and his family over $1 billion, per an NBC News analysis. Key provisions like eliminating the alternative minimum tax (which cost Trump $31 million in his leaked 2005 return), ending the estate tax, cutting the top tax rate for pass-through businesses, and raising the top income threshold for individuals, all directly benefit the rich.
"Even though he obviously hasn’t released his tax returns, I would call it transparently false (he would not benefit)," Dan Shaviro, a professor of tax law at New York University, told NBC News. "It’s five alarm false."
An analysis by the nonpartisan Tax Policy Center (TPC) estimates that over 42 percent of the individual tax gains in the House bill would go to the top 10 percent of earners in 2018, with the top 0.1 percent getting an average cut of almost $175,000.
While most middle-class households would get a tax break, a growing minority would see a tax increase over the years, especially if temporary provisions in the bill expire. By 2027, the bottom 40 percent of earners would see almost no average change in their tax bill at all versus current law. Nearly half of the bill's benefits would go to the top 1 percent.
This isn't the first time this has happened. Twice as a candidate and again as president, Trump threatened to raise taxes on himself only to release his own plan with significant breaks for the top.
In 2015, Trump drew criticism from the right after decrying a tax benefit for hedge funds (which the House and Senate bills don't eliminate) and saying he would raise his own taxes. He then proposed a tax cut with far bigger gains for the rich than the current GOP bills — 35 percent of its benefits went to the top 1 percent, per a TPC study — even as he claimed it would "cost me a fortune."
As he moved closer to the nomination, Trump said on NBC's "Today" show that he believed in raising taxes on the wealthy "including myself" and told CNBC that he was "not necessarily a huge fan" of his own plan's cuts for the rich, eventually disavowing the proposal. He then put out a new one that, yet again, contained major breaks for the rich.
The top White House advisers tasked with crafting and selling a tax plan have gone on a similar rhetorical journey.
Treasury Secretary Steve Mnuchin said in a CNBC interview after the election that there would be a "big tax cut on the middle class" but "there would be no absolute tax cut for the upper class," which would lose in deductions what they gained in any changes to rates. The pledge became popularly known as "the Mnuchin rule."
But in August, the administration put out its own tax framework with similar cuts for the top. As late as September, Mnuchin still claimed, against all evidence, that "there's not a tax cut for the rich." But he soon scaled back his language. "When you're cutting taxes across the board, it's very hard not to give tax cuts to the wealthy with tax cuts to the middle class," he told Politico in October.
Gary Cohn, the top White House economic adviser, declared "the wealthy are not getting a tax cut under our plan" in an ABC News interview in late September. Told by CNBC’s John Harwood in November that the claim was not true, he replied, "If someone's getting a tax cut, I'm not upset that they're getting a tax cut."
Despite Mnuchin’s claim, there’s no inherent reason the House or Senate bill has to cut taxes for the rich. An alternative plan might have focused on refundable tax credits for middle and lower income families, an idea promoted by two Republican senators, Marco Rubio of Florida and Mike Lee of Utah. The cost of the estate tax changes — $150 billion in the House bill and $83 billion in the Senate — could have been used to finance cuts elsewhere. Benefits for pass-through businesses could have gone to smaller mom-and-pop shops by cutting rates on their brackets alone.
Instead, people like Trump, whose business empire runs on pass-throughs, stand to see major gains.
"If someone wanted to have tax reform that didn't cut taxes on the rich, it would not be hard to do," Shaviro said. "You would just design it that way."
