The revelation that Donald Trump’s business losses in the mid-nineties may have enabled him to avoid paying federal income tax for nearly two decades may be the biggest “October surprise” of any recent Presidential campaign. But the substance of it was no surprise at all. When, in the first debate, Hillary Clinton challenged him about years in which he may not have paid federal taxes, he boasted, “That makes me smart.” And his real-estate empire, such as it is, was built on exploiting just about every government tax abatement, credit, and subsidy available.
Still, whatever tax savings Trump has finagled over the years are dwarfed by the huge tax break he plans to give wealthy Americans if he wins. According to the Tax Foundation, Trump’s tax plan would boost the after-tax income of the top one per cent by ten to sixteen per cent, while average households would gain only between .08 and 1.9 per cent. He would lower the estate tax, which only the rich pay. He would slash the corporate tax rate by more than half, to fifteen per cent, and has said that any business would be able to take advantage of that lower rate, even so-called pass-through corporations, whose profits are typically taxed via personal income taxes rather than via corporate taxes. That would mean a huge windfall for, among others, hedge-fund and private-equity managers.
None of this is shocking, given Trump’s obvious affection for paying as little in taxes as possible. But it’s worth noting how oddly tax cuts for the wealthy fit with the rest of his campaign. Trump has presented himself as an outsider sticking up for the ordinary voter against fat cats and special interests, and, as he says, “taking on big business and big media and big donors.” He has burnished his populist credentials by challenging G.O.P. orthodoxy on issues like trade and immigration, while promising to protect Social Security and Medicare. Yet his tax plan follows conventional Republican supply-side economics: hefty tax cuts for the wealthy and for corporations, and blind faith that cutting marginal tax rates will drive growth.
This ploy-Palin in the streets, Reagan in the balance sheets-is a crucial part of Trump’s strategy for winning in November. No matter how much his core supporters love him, he has no chance unless he can persuade traditional Republicans, many of whom would have preferred a more traditional candidate, to turn out. There’s little that this base cares about more than cutting taxes, an issue that has taken on the status of a moral creed. In 2012, the Republican platform stated, “Taxes, by their very nature, reduce a citizen’s freedom.” Trump’s tax plan signals to conservatives that he is ultimately on their side.
There are political risks to Trump’s embrace of supply-siderism. After all, more than sixty per cent of Americans think that the wealthy should pay more in taxes. And his plan will only reinforce the image of the Republican Party as the home of rich people, something that has already started to worry a few Republicans, known as reformocons. “There are a lot of voters who look at Republican politicians and say that all they care about is cutting taxes for rich people,” Michael Strain, a fellow at the conservative American Enterprise Institute, told me. Strain and other reformocons think that the Party could draw new supporters if it started thinking creatively about using tax credits and subsidies to incentivize work, education, and long-term investment.
But, though Trump’s tax plan may not attract many independents, let alone Democrats, it’s unlikely to bother the white working-class voters who are his most ardent fans. Few voters pay attention to the small print of tax proposals, which makes it easier for tax-cut proponents to put their policies in the best possible light, as Trump is doing by insisting that cutting taxes for the rich is really all about boosting employment. “The wealthy are going to create tremendous jobs,” he said in the first debate. More fundamentally, polls show that taxes just aren’t an emotive issue for most voters. As long as Trump’s working-class supporters believe that he’s with them on the issues they care about most-bringing back jobs, keeping immigrants out-no tax policy will drive them away.
Put simply, white working-class voters are willing to tolerate a handout to the rich in exchange for the rest of Trump’s ideological agenda, while the Republican establishment is willing to elect an ethno-nationalist populist in exchange for tax cuts. The fact that more than eighty per cent of registered Republicans now say they’ll vote for Trump demonstrates that, as long as a candidate can be counted on to bring taxes down, traditional Republicans will overlook any number of heresies and offensive statements. Coming out against free trade and open borders, defending entitlements, attacking veterans, cozying up to foreign autocrats, indulging in openly racist and xenophobic rhetoric: none of these things have hurt Trump with the vast majority of Republican voters and politicians. If he had wavered on tax cuts, it would have been a very different story. Trump may be the most politically incorrect man in America, but even he knows that there are some taboos you can’t violate.