First Donald Trump antagonized the Republican establishment with his proposals on immigration. Then he irritated some with his stands on trade and Social Security. Now Trump is preparing a tax proposal that will again set him far apart from the party's powers-that-be.
The problem for the establishment is that Trump's positions on all three issues are more in line with the majority of American voters than the establishment's preferred policies. By using his popularity to force outside-the-GOP-box ideas into the Republican presidential debate, Trump is displaying an uncanny sense of the divisions between voters and the GOP power structure.
Trump has been sending signals that his tax proposal, which he says will be "comprehensive," will include higher rates for some of the richest Americans, a position generally at odds with Republican orthodoxy. "I want to see lower taxes," Trump said at an appearance in Norwood, Mass., on Friday night. "But on some people, they're not doing their fair share."
In particular, Trump has said he will go after "carried interest," which refers to the practice of hedge fund managers who make hundreds of millions of dollars a year paying a lower tax rate than Americans who earn ordinary wages. "I would take carried interest out, and I would let people making hundreds of millions of dollars a year pay some tax, because right now they are paying very little tax and I think it's outrageous," Trump told Bloomberg Politics last week. "I want to lower taxes for the middle class."
"Hedge fund guys have to pay up," Trump said Friday on MSNBC. "I'm going to lower taxes, but these hedge fund guys are making a lot of money — I have friends who laugh about how little they pay — and it's not fair to the middle class."
Trump appears to have a special concern about hedge fund executives — "They don't really build anything, they shuffle paper," he said on MSNBC. But his comments to Bloomberg suggest he might also target "people making hundreds of millions of dollars a year" in a more general way. Asked about a broad policy of increasing taxes on the super rich, Trump campaign manager Corey Lewandowski would say little about Trump's intentions, but noted that "Mr. Trump has said that he does not mind paying what is required to make our country great again."
Raising taxes on anyone, even the super rich, has generally been anathema to Republicans for a generation. But Trump will probably find a receptive ear among American voters overall. An academic study by Stanford professor David Broockman and Berkeley Ph.D candidate Douglas Ahler — a study that also had revealing findings about immigration — suggests that Trump's views on taxes are closer to the public's than those of Republican elites.
In the paper, Broockman and Ahler examined a broad range of public opinion on several issues. They conducted a poll in which respondents, rather than being given either-or policy options, were presented with a range of seven different possibilities on a particular issue, from the far left to the far right. On the question of federal taxes, these are the options Broockman and Ahler presented to respondents:
1. Establish a maximum annual income, with all income over $1,000,000 per year taxed at a rate of 100 percent. Decrease federal taxes on the poor and provide more services benefiting the middle class and poor.
2. Increase federal income taxes on those making over $250,000 per year to pre-1990s levels (over 5 percent above current rates). Use the savings to significantly lower taxes and provide more services to those making less and to invest in infrastructure projects.
3. Increase federal income taxes on those making over $250,000 per year to 1990s rates (5 percent above current rates). Use the savings to lower taxes and provide more services to those making less while also paying down the national debt.
4. Maintain current levels of federal spending and federal income taxes on the rich, middle class, and poor.
5. Decrease all individuals' income tax rates, especially high earners who pay the most in taxes now, accomplished by decreasing government services.
6. Move to a completely flat income tax system where all individuals pay the same percentage of their income in taxes, accomplished by decreasing government services.
7. Move to a flat consumption tax where all individuals pay the same percentage of their purchases in taxes, banning the income tax, even if this means the poor pay more in taxes than the rich. Significantly decrease government services in the process.
Broockman and Ahler found the most favorable responses clustered on the left side of the spectrum. The results: 11.7 percent favored Option 1; 26.2 percent favored Option 2; and 28.6 percent favored Option 3. Together, that is 66.5 percent — two-thirds of those surveyed — on the tax-the-rich side.
On the right side, Broockman and Ahler found 7.9 percent favored Option 7; 13.3 percent favored Option 6; and 1.4 percent favored Option 5. That's a total of 22.6 percent. Right in the middle — Option 4 — was favored by 10.9 percent.
If Broockman and Ahler are correct, it seems unlikely Trump's tax-the-super-rich proposal will hurt him with large numbers of voters, certainly not with general-election voters. But what about Republican primary voters specifically? It's unclear, but a recent CNN poll showed that by a large margin, GOP voters believe Trump is best equipped to handle the economy — 45 percent of those surveyed chose Trump, compared to the second-place finisher, Jeb Bush, with eight percent.
Bush has already denounced Trump's tax intentions. "I cut taxes every year; he's proposed the largest tax increase in mankind's history, not just our own country's history," Bush said at a recent appearance in Keene, N.H. Bush was apparently referring to a 1999 Trump proposal — Trump was toying with the idea of running for president back then — in which Trump advocated a one-time-only tax of 14.25 percent on the net worth of all Americans worth more than $10 million. Under Trump's proposal, the money raised would have been used to pay off the national debt completely and use the resulting savings — all the interest the government no longer paid — to cut taxes and shore up Social Security.
Trump no longer supports the idea, which — to put it charitably — economists at the time thought was wildly impractical. But the question is whether Bush and other Republicans will get much traction using Trump's 16 year-old notion against him now. Even if Bush characterizes it as a crackpot scheme, the core of the plan was Trump supporting taxing the super rich to solve an enormous public policy problem. That's going to hurt him badly now?
Dismissed as a "clown" and a "buffoon," Trump has throughout the race shown a shrewd sense of the Republican establishment's weaknesses with its voters. And now, he appears to be ready to challenge GOP orthodoxy one more time.