The Finance 202: Trump and tax negotiators still don’t seem to be on same page

 In U.S.
THE TICKER

President Trump on Sunday evening told reporters that his administration has “totally finalized” its tax plan. 

It hasn’t. 

On Monday — two days before Trump will deliver a major speech on the proposal and House Republican leaders brief their rank-and-file on it — the lead tax negotiators known as the “Bix Six” still hasn’t decided how much to reveal about what’s in it. And it’s unlikely the framework they unveil tomorrow will include provisions raising revenue to pay for the reduced rates for individual and corporate taxpayers.

But Trump and the “Big Six” still seem like they’re on different pages when it comes to the details: the president has said that the plan will in no way benefit the wealthy (yet its outlines suggest it will do just that); and has declared he would like to slash the corporate rate to 15 percent despite some apparently rare consensus among tax negotiators they can’t achieve a rate lower than 20 percent. 

What is clear is that Republicans and the president badly want to move on to what they view as more favorable terrain after the disastrous attempt to repeal Obamacare (though there’s some reporting out there suggesting that health care will be revived somehow). They hope a tax code rewrite — a favorite with both the conservative base and the business establishment — will redeem them.

“My primary focus, I must tell you — and has been from the beginning as you can imagine — is taxes,” Trump said Sunday. “I believe we will be successful in the largest tax cut in our country’s history.” 

Brand new polling data from a Washington Post-ABC news survey reveals most voters aren’t as enthused. As my colleague James Hohmann points out over in The Daily 202 this morning, the poll finds only 28 percent of respondents support Trump’s tax plan, given what they know about it, and 44 percent oppose it (while 34 percent have no opinion yet). A majority — 51 percent — think the proposal will benefit the rich, and only 10 percent believe it will mainly help the middle class. A relatively meager 60 percent of Republicans are on board; and while 15 percent of all voters strongly support the push, 33 percent oppose it strongly. 

Setting the poll aside, those counting on the project’s success — including investors enjoying the stock market rally that’s arguably priced in action on an overhaul — could have reason to believe Trump stands on firmer footing as he moves into this debate. By his own accounting, it’s the corner of public policy that he has tangled with most directly in his life as a businessman. Recall that a year ago today, when Trump met Hillary Clinton in their first presidential debate, the Democratic nominee accused him of not paying income taxes (we can’t be certain as Trump has not released his tax returns). “That makes me smart,” an unapologetic Trump replied. 

Watch the exchange here: 

A few days later, the New York Times reported that Trump claimed a $916 million loss on his 1995 tax returns, “a tax deduction so substantial it could have allowed him to legally avoid paying any federal income taxes for up to 18 years.” 

Trump doubled down, arguing the revelation only demonstrated his mastery of the system. ““I mean, honestly, I have brilliantly — I have brilliantly used those laws,” Trump said at the time. “I was able to use the tax laws of this country, and my business acumen, to dig out of the real estate mess — you would call it a depression — when few others were able to do what I did.”

His accountant told a different version of the story. Jack Mitnick — who first prepared Trump’s father’s taxes, then worked for the real estate developer for three decades — told CNN that Trump played a “virtually zero” role formulating his own tax strategy. And Mitnick told the Times that when Trump and his then-wife Ivana came in to sign their forms, “it was almost always Ivana who asked more questions.” 

The last president to sign a major rewrite of the tax code into law wasn’t a CPA, either. But as the Trump team prepares to lift the curtain on its third version of a tax framework, the president’s continued statements at odds with what little consensus they’ve achieved risk revealing him as an emperor with no clothes. 

MARKET MOVERS

Puerto Rico crisis deepens. The New York Times: “Gov. Ricardo A. Rosselló of Puerto Rico said on Monday that the island was on the brink of a “humanitarian crisis” nearly a week after Hurricane Maria knocked out its power and most of its water, and left residents waiting in excruciating lines for fuel. He called on Congress to prevent a deepening disaster.

Stressing that Puerto Rico, a United States territory, deserved the same treatment as hurricane-ravaged states, the governor urged Republican leaders and the federal government to move swiftly to send more money, supplies and relief workers. It was a plea echoed by Puerto Rico’s allies in Congress, who are pushing for quick movement on a new relief bill and a loosening of financial debt obligations for the island, which is still reeling from a corrosive economic crisis.”

Trump weighed in with a series of tweets on Monday night, noting in part that the island’s creditors still need to be paid: 

Not everyone thought that emphasis was appropriate:

MONEY ON THE HILL

Defenders of the state and local deduction step up. A new lobbying coalition that’s sprung up to protect the deduction for state and local taxes is out with a new report showing the write-off benefits the middle class. Expect a lot more of these as tax-writers begin to target sources of new revenue. Washington Examiner’s Joseph Lawler: “The analysis, published by the Government Finance Officers Association, found that nearly 86 percent of the taxpayers who claimed the credit had an adjusted gross income under $200,000 in 2015.”

Hill staff are trading stocks despite conflicts. Politico’s Maggie Severns: “A POLITICO review of federal disclosures for 2015 and 2016 found that some senior aides regularly buy and sell individual stocks that present potential conflicts of interest with their work. A smaller number of staffers trade in companies that lobby Congress and the committees that employ them. In all, approximately 450 aides have bought or sold a stock of more than $1,001 in value since May 2015. That’s likely just the tip of the iceberg, since most congressional aides aren’t required to report their trades.” (Paging Brody Mullins.)

House Dems block FAA reauthorization. Politico’s Heather Caygle and Laura Gardner: “House Democrats on Monday blocked a Republican push to fast-track an FAA extension, with just days to go until current law expires Sept. 30. Top Democrats announced plans to vote against the six-month extension earlier in the day, citing opposition to unrelated Republican add-ons dealing with flood insurance, tax credits for victims of recent hurricanes and expiring health care programs… House Republicans are expected to bring up the bill again under a rule — which requires only a simple majority for passage — later this week. But Senate Democrats are also uneasy with the extension, and it’s unclear whether they would block the bill in the upper chamber.

 

POCKET CHANGE

AIG restructuring into three units. New CEO Brian Duperreault is putting his stamp on the company with a plan that includes eliminating its separate consumer and commercial businesses. “Under the new structure, AIG will have a general insurance business, a life and retirement unit and a stand-alone technology unit. Two of those businesses will be led by longtime colleagues Duperreault recruited to AIG in July,” Reuters’ Suzanne Barlyn, Sweta Singh report. 

Deloitte hacked. CNNMoney’s Alanna Petroff: “The cybersecurity breach, which was first reported by The Guardian newspaper on Monday, impacted “only very few clients,” Deloitte said in an emailed statement… The hack compromised ‘confidential emails and plans of some of its blue-chip clients,’ but the breach went unnoticed for months. It reported that six clients were told their information was ‘impacted.'”
 

 — Uber apologizes in London. The New York Times’ Prashant S. Rao and Amie Tsang: “Uber’s chief executive, Dara Khosrowshahi, apologized in an open letter on Monday for the company’s “mistakes,” after the transport authority for London said last week that it would not renew the ride-hailing service’s license to operate in the city… The statement did not specify what, exactly, Uber was apologizing for, but the conciliatory tone represented a stark change for a company that, under its previous chief executive, Travis Kalanick, was better known for its aggressive approach from the get-go. Uber intends to appeal the decision last Friday by Transport for London, a move that would prevent the company from doing business in its biggest European market, and it will be allowed to continue to operate during the appeals process.”

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