President Trump’s chief economic adviser Gary Cohn recently took pains to separate himself from other administration officials when he revealed how “distressed” he was by President Trump’s response to the deadly white-nationalist rally in Charlottesville. (Not distressed enough to quit the administration and sacrifice his chances of becoming the next Federal Reserve chair, but distressed nonetheless.)
But rest assured that on economic issues, Cohn is still more than comfortable playing the villain.
The New York Times reports that, amid plans for a politically difficult tax-reform push, Cohn asserted that a tax affecting only the very rich can be repealed because any minimally competent wealthy person knows how to avoid it:
In a meeting with a group of Senate Democrats this year, according to people who were present, Mr. Cohn jokingly dismissed concerns about the wisdom and cost of repealing the estate tax, remarking, “Only morons pay the estate tax.”
A source close to Mr. Cohn denied that he had used the word, saying he had been referring to “rich people with really bad tax planning.”
The comment echoed one famously attributed to “Queen of Mean” Leona Helmsley: “We don’t pay taxes; only the little people pay taxes.”
As CNBC’s Robert Frank writes, there’s some evidence for the Helmsley-Cohn hypothesis. Since the tax applies only to parts of estates that are valued over $5.49 million for individuals or $10.98 million for couples, it only applies to about 1 in 500 taxpayers. And the threshold for triggering the penalty, which Republicans like to call the “death tax,” has risen dramatically in the last decade, leading to plunging revenues collected from it. Frank notes another major factor for the decline:
But the less-noticed reason for the decline in estate tax payments is lawyers. Estate tax planning has become so effective that wealthy families can now easily pass large portions of their estates to their heirs without paying the tax. There’s nothing wrong or illegal about it: Shielding an estate from Uncle Sam often merely involves setting up an appropriate trust and filling it with assets. Other wealthy families can avoid the tax through gifts, since the amount that’s exempt from gift taxes has also gone up.
If the estate tax is so trivial, revenue-wise — and it is — why would Cohn and his partners in tax-cutting crime even bother expending political capital on it?
Because for the superrich, it remains an expensive hassle, one that requires often elaborate workarounds: setting up dubious foundations, moving money into exotic banks, hiring expensive lawyers, and so on.
That making extremely rich people’s lives slightly less burdensome is important enough to Trump that he’s sending out his chief economic adviser to sell it to Senate Democrats tells you tells you everything you need to know about President Trump’s faux-populist tax plan.
