Trump’s Tax Plan Sends Shivers Down Trumpland’s Spine – Vanity Fair
Back in April, Donald Trump sent out a pair of Goldman Sachs alums to unveil his grand tax plan. Essentially, it was “tax cuts!” written over and over again in 14-point font that was, amazingly, not Comic Sans. Tax cuts for corporations. Tax cuts for the wealthy. Tax cuts for the middle and lower classes, too, but, disproportionally, tax cuts for the Donald Trumps of the world. Trillions in tax cuts that, magically, would pay for themselves. Though woefully lacking in actual details, the plan has not garnered great reviews, with 52 percent of Americans saying they disapprove of it and economists across the political spectrum saying it will add trillions to the debt and slow growth.
Perhaps the most qualified group of people to weigh in, though, are the residents of Kansas, who in 2012 were treated to yuge tax cuts under a plan “unbelievable[y]” similar to Trump’s, according to the state’s former secretary of administration, Duane Goossen. Like Trump, Governor Sam Brownback promised the tax cuts would pay for themselves, “benefit everybody,” and “be a ‘shot of adrenaline to the heart’ of the Kansan economy,” Goossen told The Guardian. Perhaps not surprisingly, Goossen said, the cuts overwhelmingly helped “a small group of wealthy Kansans while the state’s budget has been left with a roughly $1 billion shortfall.” It’s previously vaunted school system, which people like Judith Deedy moved to take advantage of, has been hit with year after year of cuts. “I chose to live in Kansas. We don’t have beaches, we don’t have mountains, but we have great public schools. Well, not anymore. There was no shot of adrenaline—you didn’t have to be an economist to see that. The cuts have been so deep we may never get back to where we were,” Deedy told Guardian reporter Dominic Rushe.
Like the president’s proposal, the 2012 Kansas plan allowed for massive tax cuts to companies structured as “pass-throughs,” allowing the owners of limited-liability companies—like, for example, the Trump Organization—to pay a corporate tax rate on their income. Under the president‘s plan, the corporate tax rate would be slashed to 15 percent from 35 percent and experts have already predicted that if Trump gets his way, there will be an onslaught of individuals, like doctors, lawyers, and hedge-fund managers, rushing to characterize themselves “as independent contractors who run small corporations in order to use the 15 percent pass-through tax when they should simply be paying the personal income tax rate,” which is exactly what happened in Kansas. Prior to the implementation of Brownback’s cuts, The Guardian notes, Kansas had roughly 190,000 LLCs; now, it has approximately 300,000, which has translated to savings for wealthy taxpayers and a loss of revenue for the state. Despite Brownback’s 2014 promise that his plan would create 100,000 jobs over the next four years, as of March 2017, Kansas had added a piddling 12,400 private-sector jobs. “We are a cautionary tale,” Goossen said. “It sounds great, everybody gets a tax cut and it’ll balance—but it just doesn’t work.”
Meanwhile, the architect of the original plan, supply-side economics leader Arthur Laffer, has but one regret: that Kansas’s tax cuts weren’t bigger. “When you put an atomic bomb on a place, it will materially change the place—but a cherry bomb probably won’t change the buildings or anything else,” he told Rushe.
Amazingly, Brownback, who consistently polls as the least popular governor in America, said last month that he’s “heartened” by Trump’s plan.
Trump, for his part, is reportedly basing his own tax plan on a New York Times op-ed co-written by Laffer.
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Big energy begs Trump to pump the breaks on deregulation
If you’re looking for an example of just how crazy Donald Trump’s plan to deregulate the hell out of every industry is, look no further than the people who make their money off of fossil fuels, who stand to benefit greatly from Trump’s pledge to take an ax to rules affecting their business, and who, according to a report from Axios, are asking the president to slow down and not get carried away.
The most conservative wing of the Republican Party, including many of the people and interest groups that helped elect Trump, want a wholesale rollback of virtually everything Obama has done on energy and environment issues over the last eight years. Ironically, it’s the regulated industries proving to be a countervailing influence against the GOP’s most conservative ranks. Automakers and companies producing oil, natural gas and coal want to ensure changes endure through leadership changes in Washington and legal fights despite environmental opposition. “We have an administration that clearly is very exuberant about cutting back on regulations, and there was concern if they listened only to the far right wing they’d do things that would ultimately be bad for industry,” said one industry official who spoke on the condition of anonymity.
According to Axios’s Amy Harder, major oil companies want “the Environmental Protection Agency to keep intact but modify a methane rule affecting new wells across the U.S.” The auto industry “has lobbied the Trump administration to redo a review of Obama-era fuel efficiency standards, but they don’t support throwing out the standards altogether,” nor do they want California’s waiver to issue more aggressive standards to be revoked. And most oil and gas companies “don’t want the Interior Department to repeal a rule it issued last year in response to the 2010 BP oil spill.”
As is the case with companies like General Electric and ExxonMobil, both of which have urged Trump not to pull out of the Paris agreement, these industries’ underlying motives likely have less to do with management secretly becoming tree-huggers and everything to do with their bottom lines. At the end of the day, executives and shareholders rely on sustainable regulations in order to make long-term forecasts and investments. But their opposition shows just how unpopular Trump’s desire to murder the planet in cold blood is turning out to be.
Republican Congressman wants to neuter whistle-blower program
House Financial Services Committee chairman Jeb Hensarling has little time for rules that protect individuals at the expense of corporations. He’s previously described the Consumer Financial Protection Bureau, designed to protect consumers from, among other things, predatory lending, a “dictator” and is currently working on killing Dodd-Frank. So it should probably not come as a shock that he also wants to get rid of key aspects of the Securities and Exchange Commission’s whistle-blower program that advocates say are essential to getting people to speak up when they witness wrongdoing on the job. The New York Post reports that the Financial CHOICE Act 2.0, introduced by Hensarling, wold “require whistleblowers to try and stop violations from happening within their company—a stipulation that advocates fear would force employees to choose between being fired for not reporting anything at all.” (CHOICE 2.0 would also prevent whistle-blowers involved in wrongdoing from collecting rewards, which doesn’t seem as unreasonable.) As Michael Kohn, president of the National Whistleblower Center, notes, “If you require an individual to go internally, they know they are putting their financial livelihood and their careers on the line, and they won’t go.”
Hordes of angry millennials not the only people Fyre Festival organizers must answer to
At the end of April, thousands of millennials headed to the Bahamas for the Fyre Fesitval, a multi-day music event that organizers promised would be like no other, including villas, yachts, five-star dining, models galore, and other such earthly delights worth the five figures some paid for all-inclusive V.I.P. packages. Instead, they arrived to a scene out of their worst nightmares: instead of villas, there were half-built tent cities. Instead of artisanal meals, there were single slices of cheese and limp lettuce. Headliner Blink-182 canceled at the last minute (the band did not respond to a request for comment at the time). Models like Kendall Jenner, who was reportedly paid $250,000 to promote the event on Instagram, were nowhere to be seen. Organizers apparently didn’t have a clue what they were doing. Attendees were reportedly “left stranded, waiting through the night for a ride off the island.” For many, it was like Lord of the Flies come to life. Within a week of the disaster, four class-action suits were filed, with one seeking damages of $100 million. And, according to Bloomberg, angry early twentysomethings aren‘t the only ones Fyre Media founders Billy McFarland and Ja Rule must face:
Now come demands from backers looking to recoup their investment—funding that in one case was directly connected to how much attendees spent on such extras as tours, booze, and “upgrades.” Fyre Festival organizers took out a $3 million loan from a New York firm run by Ezra Birnbaum. Listed as a “member” of EHL Funding LLC, Birnbaum is now suing the festival’s organizers for defaulting. A second loan, for as much as $4 million, was tied to Carola Jain, the wife of prominent Wall Street executive Bob Jain, co-chief investment officer of the $35 billion hedge fund Millennium Management. Birnbaum’s loan was to be repaid with money Fyre received for festival-related purchases, such as tickets and funds added to electronic wristbands meant for on-site digital payments. Fyre was to fork over at least 40 percent of what it received this way, or by other electronic means, according to a copy of the promissory note. Around the time organizers took out the loan from Birnbaum, himself tied to a now-settled U.S. Securities and Exchange Commission fraud suit, ticket-holders began receiving emails encouraging them to put hundreds of dollars on their “FyreBands” to use for buying items and services such as extra beach tours and boat rentals.
And while attendees reportedly put $700,000 on the wrist bands prior to the event (money that Birnbaum never saw, according to his complaint), once they arrived on Great Exuma island, they weren’t much in the mood to pony up the millions more necessary for investors to recoup their losses.
Ex–Bank of America V.P., husband allegedly ran extremely f*cked-up scam
Quick, what’s a great way to get on 2017’s annual Worst People in America list? Take a page from former Bank of America senior vice president Palestine Ace and her husband Jonathan Ace’s playbook! The husband-and-wife duo have been charged with allegedly embezzling more than $2.7 million by making charitable donations on the bank’s behalf and then “using intimidation and threats to get the money back for their personal use,” according to Bloomberg (The bank and Ms. Ace’s lawyers declined to comment; Mr. Ace’s lawyer did not respond to a request for comment. Ms. Ace has pleaded not guilty.) Prosecutors say Ms. Ace “approved 75 donations to basketball and educational programs and other organizations providing support to children with HIV/AIDS” before demanding “half the money ‘be returned in order to ensure that Bank of America would continue to fund the organization.’ ” Jonathan, who was apparently the muscle of the scam, would then, per Bloomberg, allegedly threaten recipients with “public humiliation” to get get back as much money as possible.
Cyberattack Victims Begin to Assess Financial Damage (W.S.J.)
Treasuries probe shapes up as test for White House (Financial Times)
Economist reporter: Trump is a “nationalist with a grievance” (Business Insider)
Amazon’s IPO at 20: That Amazing Return You Didn’t Earn (W.S.J.)
Millionaire to Millennials: Stop Buying Avocado Toast if You Want to Buy a Home (Time)
How Republicans actually profited off of the Tom Price stock scandal (The Hive)
JPMorgan Buying $137 Million Dublin Office for 1,000 Staff (Bloomberg)
Snap surges after Wall Street heavyweights reveal stakes (Reuters)
Travis Kalanick’s $68 billion empire could be in trouble (The Hive)
Czech Leader’s Call to “Liquidate” Journalists Was a Joke, His Office Says (N.Y.T.)