NEW YORK, New York (Sept. 28, 2015) — Donald Trump says that under his tax plan, his own wallet will take a hit.
The Republican presidential front-runner sat down with CNN’s Erin Burnett on Monday afternoon after unveiling a tax reform proposal that calls for drastic cuts in income taxes for people across the socioeconomic spectrum.
In other words, it’s not only the middle class that would benefit from Trump’s plan: Those in the upper-income bracket — making $150,001 or more as an individual or $300,001 or more as a married couple — would pay 25% in income taxes, down from the current top rate of around 40%.
Still, the billionaire real-estate mogul told Burnett that he would “end up paying more.”
“I will probably end up paying more money,” Trump said. “But at the same time, I think the economy will do better, so I’ll make it up that way.”
He added: “I really believe the economy is going to go, ‘boom.’ Beautiful.”
Now that the details are out, here’s a a look at how Trump might fare under his own tax plan.
Would Trump end up paying more?
It’s tough to say: Trump has yet to release any of his tax returns and has refused to disclose his effective tax rate, simply telling reporters Monday that he will “be announcing that in the not too distant future.”
Earlier in the day, Trump dodged the question when asked how the plan would affect his tax rate, simply saying his taxes would be “much simpler” after his reforms.
But Trump’s plan calls for slashing the top income tax bracket — wouldn’t that reduce his tax burden?
At face value, that would make sense.
Trump is bringing down the top income tax bracket to 25% from 39.6%.
He’s also slashing the corporate tax rate to 15% from 35% — which could be a windfall to his multi-million dollar businesses.
But there’s more to Trump’s plan than just bringing down income tax rates — and that’s what could make the difference.
How would the Trump tax plan raise his own taxes?
Trump’s been very clear: he wrangles a team of attorneys and accountants — “the best” — to pay the least amount of taxes the law will allow.
“I fight like hell to pay as little as possible,” Trump said Monday at Trump Tower as he announced his tax plan. “I have the best lawyers and the best accountants and I fight and I pay, but it’s an expense. And frankly, I would feel differently if this country was spending the money wisely instead of throwing it down the drain.”
All of that means Trump has probably taken advantage of every loophole, deduction and tax break in the book to reduce his tax burden — the same ones corporations and the special interests Trump decries also use.
But many of those would vanish under a Trump administration, according to his tax plan, thus increasing the amount of taxes Trump would need to shell out.
Trump’s plan vows to reduce or eliminate corporate loopholes and deductions as well as those “used by the very rich.”
But here, Trump is light on specifics, making it hard to judge whether the revenue from Trump’s loophole-plugging reforms would outweigh the tax break he’s getting from the across-the-board reduction of income tax rates.
Is there anything else in the tax plan that will impact his bottom line?
Throughout his presidential campaign, Trump has slammed the fact that hedge fund managers and others in the financial sector pay “little to no tax.”
That’s because their income is treated as carried interest and taxed at the lower capital gains tax rate.
Trump said Monday his plan would end “the current tax treatment of carried interest for speculative partnerships that do not grow businesses or create jobs and are not risking their own capital” and pointed specifically to hedge fund managers.
Some real estate investments are also considered carried interest and it’s likely Trump has also benefited from the lower capital gains rate.
So will Trump have to pay more out of that part of his business?
Maybe not. His plan is specific in talking about “carried interest for speculative partnerships” — which may be a way of targeting just the “hedge fund guys” Trump slams so often.
But if there’s one clear cut benefit Trump and his family will pull from his proposal, it’s his plan to eliminate the estate tax — a tax the federal government levies on the wealthiest families passing on an inheritance.
“No family will have to pay the death tax. You earned and saved that money for your family, not the government. You paid taxes on it when you earned it,” reads Trump’s plan.
“A lot of families go through hell over the death tax,” Trump said Monday.
His family wouldn’t, if he can get elected and implement his plan.