AP FACT CHECK: Smoke and mirrors in Trump tax plan

WASHINGTON (AP) — Nothing brings out smoke and mirrors like a tax overhaul plan, especially one as incomplete as President Donald Trump’s.

A look at some of the claims emerging from the debate sparked by the plan released Wednesday:

TRUMP: “I think there’s very little benefit for people of wealth.” — to reporters Wednesday

THE FACTS: Actually there’s a clear and substantial benefit for people of super wealth: the proposal to eliminate the estate tax. Under current law, the first $11 million of an estate is exempt for a married couple, meaning only the wealthiest Americans pay it. Those super-rich would be off the hook. Also, business owners who report business income on their individual returns — as most do — would see their top tax rate drop to 25 percent from 39.6 percent.

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Some of Trump’s claim rests with the administration’s own unique accounting. The administration has said it isn’t including the estate tax when making calculations about which income groups would benefit from the plan. Nor is it clear how Trump officials are weighing the benefits of the lower corporate taxes — which would primarily help investors.

More generally, the plan has so many holes — left for Congress to fill in — that a full picture of who gains the most cannot be drawn at the outset. The plan could well benefit both the rich and the middle class, at the cost of national debt, but that remains to be seen.


TRUMP: As Indiana governor, Mike Pence “signed the largest income tax cut in the state’s history.” — Indiana speech introducing the plan

THE FACTS: True, but it wasn’t much of a cut.

The measure the vice president signed into law as Indiana governor in 2013 took effect in stages, gradually lowering the state’s income tax rate to 3.23 percent this year from 3.4 percent.

That amounts to about $85 in savings a year for someone making $50,000 in taxable income, according to data from Purdue University economist Larry DeBoer, who has studied Indiana tax policy for about 30 years.

The only other income tax cut in state history was a 0.1 percentage point reduction in the 1970s, according to DeBoer’s data. That rate was raised during the 1980s to 3.4 percent — where it remained until Pence won the new cuts.

Overall, Pence’s income tax cut is far from the biggest tax cut in Indiana history. Statewide caps on property taxes enacted…

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