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The fine print of Trump's tax talking points

For the first time since he took office a little more than 11 months ago, President Trump has signed into law sweepin...

Posted: Dec. 23, 2017 11:33 AM
Updated: Dec. 23, 2017 11:33 AM

For the first time since he took office a little more than 11 months ago, President Trump has signed into law sweeping new legislation -- a wide-ranging tax cut that will fundamentally remake the US tax code.

Of course, none of this comes without controversy and pitched opposition from Democrats, along with allied health care and environment activists. (The bill also effectively ends Obamacare's individual mandate and opens up the Arctic National Wildlife Refuge to oil and gas drilling.)

Perhaps most notably, the cuts favor corporations more than individuals and, over time, skew sharply in favor of the rich and big business. Trump's response has been, in many cases, to ignore those details and instead focus on the cuts he says will benefit lower-income taxpayers -- though he couldn't help but note on Friday that "corporations are literally going wild" over this.

Here are a few examples from his recent remarks:

Trump: "It's the largest -- I always say 'the most massive,' but it's the largest tax cut in the history of our country -- and reform, but tax cut."

Reality: It's not. According to an analysis by CNN's Sam Petulla and Tal Yellin -- as seen below -- Trump's cut will be the fifth largest since 1964. In fairness, two of those (both by ... Obama!) were extensions of expiring legislation. But JFK and Ronald Reagan both signed larger cuts, and by a good margin.

Trump:-"The individual mandate is being repealed. When the individual mandate is being repealed, that means Obamacare is repealed. Because they get their money from the individual mandate. So the individual mandate is being repealed."

Reality: Expect to see and hear Trump's words a lot in 2018, as Democrats tie the tax bill (which is very unpopular) to GOP efforts to repeal Obamacare (also unpopular). They'll also note estimates that show 13 million people could lose coverage as a result, with premium hikes for others.

From a legislative standpoint, this statement is also flawed. As CNN's Z. Byron Wolf explained on Wednesday, the mandate is not being "repealed"; rather, the tax penalty is being reduced to zero. So the (now toothless) mandate remains on the books, as does Medicaid expansion for the states that accepted it. Obamacare subsidies are also on the table for revival, with Republican Sen. Susan Collins promising to push for an stabilization bill next year as part of the deal she struck with GOP leaders on the Hill in exchange for her tax vote.

Trump: "Excited to be heading home to see the House pass a GREAT Tax Bill with the middle class getting big TAX CUTS!"

Reality: Again, while not entirely false, this (from a November tweet)-is fundamentally misleading.

While 80 percent of tax filers will see some kind of cut, they aren't the main target of the bill. As Trump himself conceded on Wednesday, the corporate cut -- from 35% to 21% -- is "probably the biggest factor in this plan." It's also a permanent cut, unlike everyone else's. Those expire in 2025 and could lead to higher taxes for some middle class families. Additionally, by capping state and local tax deductions at $10,000, people in higher tax states, like anti-Trump power bases New York and California, could end up owing more right away.

Trump:-"America's tax code is a total dysfunctional mess. ... It is riddled with loopholes that let some special interests, including myself, in all fairness -- it is going to cost me a fortune, this thing ... believe me, believe me, this is not good for me."-

Reality: The tax bill will almost surely further enrich Trump and his family. (It's hard to say for sure because he never released his returns, but even White House Press Secretary Sarah Sanders recently conceded that Trump stands to benefit.) To start, the individual rate for the highest earners will drop to 37% from 39.6%. Then there's the new-"pass-through" provision, which will allow "small businesses" like the Trump Organization, which had been taxed at the individual rates, to take a 20% deduction.

And then there's the estate tax. Congrats are due here to the Trump kids. Per CNNMoney's Julia Horowitz's comprehensive rundown of the bill, "The amount of money exempt from the (estate) tax -- previously set at $5.49 million for individuals, and at $10.98 million for married couples -- has been doubled."

The Point:-Trump is always a salesman, but his tax pitch is about to come under much greater scrutiny than any past business deal. It's now up to the Democrats, as we enter 2018, to convince Americans that the tax bill is bad and that its biggest cheerleader can't be trusted. By fudging the details, or just plain lying, Trump is gifting them extra ammo.

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