Donald Trump recently proposed a dramatic tax reform plan that lowers the top income tax rate to 33% from the current 39.5%. It also cuts the tax on “pass through” income — the partnerships and S Corporations often favored by the rich — to only 15%. Media outlets have speculated about whether these measures could quickly pass Congress, if Congress remains in Republican hands. Trump himself suggested his proposed rates would change after they’re “negotiated” with the legislators, many of whom (especially Dems) would complain the cuts are regressive.
This is all silly. Trump doesn’t need Congress to effectively lower tax rates. All he needs is two words: “prosecutorial discretion.” As president, he could simply have his Internal Revenue Service announce that, while existing law seems to require the rich to pay at 39.5%, it will choose (as it must, given its limited resources!) not to prosecute any individual taxpayer who pays at least 33%. Same for “pass through” recipients who fork over 15%.
Of course, these taxpayers would have to comply with various other criteria that Trump’s tax authority will reasonably take into account: Have they used the proceeds to buy American-made goods? To invest in American factories that refuse to ship jobs overseas? To respect First and Second Amendment rights? All laudable goals! Those that meet those criteria — spelled out in some detail in the fine print — would be rewarded with a letter from the IRS to show investors, saying that they are in the clear.
The inherent executive authority to do this is “well established,” according to Democratic Senate leader Harry Reid.**
** — Of course, Reid was commenting on President Obama’s action to give work permits to — and rule out prosecution of — “dreamers” and certain other undocumented immigrants who met his criteria. But what difference, at this point, does that make?