Donald Trump’s campaign last week eliminated any mention of one of his major tax proposals -- a proposed tax cut that would benefit private-equity funds and hedge funds -- from his published plan.
Now, after conflicting statements from Trump’s advisers, an independent economist who has worked closely with Trump’s campaign to review its tax proposals says he can’t tell if that tax cut is alive or dead.
“This ambiguity is a big deal,” said economist Alan Cole, of the Tax Foundation, a Washington-based tax policy group.
The Tax Foundation took the unusual step Monday of issuing a range of potential costs for Trump’s tax plan. Without the cut, which would benefit businesses from mom-and-pop grocers to hedge funds, the plan would cost $4.4 trillion over the next decade, before accounting for economic growth. With it, that cost would be $5.9 trillion -- $1.5 trillion more than Trump cited last week.
Despite an e-mail exchange with Cole in which a Trump adviser indicated the campaign changed its position on the tax cut, Stephen Miller, another senior policy adviser to the campaign, said in a statement Monday evening that: “Our position has never changed.” Miller said the campaign had added “safeguards to make sure no one can abuse the system by applying this lower rate to non-business income.”
Adding to the confusion, the campaign on Monday morning posted a brief statement titled “Trump policy on business taxes” to its website, but then soon removed it. The statement said businesses could choose how they wanted to be taxed, according to a screenshot made before it was withdrawn.
Stephen Moore, an economist who has been advising Trump, said little to clarify the situation Monday. The campaign will work on the issue with the Republican-led House Ways and Means Committee, which writes tax policy, he said.
At issue is whether Trump’s call for a 15 percent tax rate would apply not just to large corporations known as “C corporations,” but also to partnerships, limited liability companies and other businesses known as pass-throughs. The pass-through structure is a mainstay of both small businesses and investment partnerships. Such businesses don’t pay income taxes, but pass their earnings through to their owners, who then pay taxes at their individual rates. Because the current top rate is 39.6 percent, Trump’s proposal represented a major tax cut for many pass-through businesses.