July 2017, Eileen Appelbaum and Rosemary Batt
As the Trump administration and the Republican controlled Congress prepared in June to turn their attention to tax reform, they made clear their intention to develop their proposed revision of the U.S. tax code in secret. The plan, apparently, is to remake the tax system behind closed doors in meetings that include only top Republican Congressional leaders, excluding most Republicans, all Democrats, and the American public from the deliberations. Trump’s top economic advisor, former Goldman Sachs executive Gary Cohn, is on record saying, “We don’t want to be negotiating the tax bill on the floor [of Congress].”
In April 2017, the administration put out a one-pager that signaled what its tax proposals will include. Billed as tax reform, the document instead proposed massive tax cuts for business that will benefit Trump, his family, and his wealthy friends. The tax system already serves to enrich the wealthy and, as we learned from the Republican health care plan, more tax cuts for the rich and richer will come at the expense of programs and services that middle and working class families need. According to the Congressional Budget Office (CBO), the Senate health care plan put forth by the Republicans would provide $541 billion over 10 years in tax breaks for the wealthy and another $210 billion in other reductions to the Treasury while reducing federal payments for Medicaid — a program that covers high cost care for preemies, pays for nursing home care for the elderly, gives the poor access to health insurance, and provides services to disabled children and adults that enable them to participate in school, work and their communities.4 This tax “reform” can be expected to produce more of the same.
Private equity millionaires are among those who benefit most from the current tax system and who may have the most to gain from some of the massive tax cuts outlined in Trump’s tax plan. In this issue brief we examine the ways in which the current tax code benefits private equity firm partners. True tax reform would seek to make the tax code fairer and would redress the unfair advantages enjoyed by this, and other, special interest groups.