Trump has a plan to change the tax code to make himself much, much richer

The plan creates a massive loophole with which ordinary people can evade taxes. Instead of just working for Vox.com, I could form DylanCorp LLC, contract with Vox to provide writing services, and pay a 15 percent rate on DylanCorp’s earnings rather than my current 25 percent rate. For rich people paying a top rate of 39.6 percent (or the top individual rate of 33 percent that Trump proposed during the campaign)

.. A new study finds that when Kansas exempted pass-through income, the result wasn’t more investment or growth but a surge in this kind of tax avoidance.

.. the Trump Organization, and the entire Trump family. The Trump Organization isn’t a “C corporation.” It doesn’t pay corporate income tax. Instead, it’s structured as a collection of pass-through enterprises, so the vast majority of income accruing to Trump and his family is taxed through this system. Trump almost certainly pays the 39.6 percent rate on his earnings, so he’s cutting his own top tax rate by more than half. It’s the most transparently self-interested policy he’s proposed since taking office, and it will likely save him tens of millions of dollars.

.. That return also implied that without the alternative minimum tax, which Trump wants to repeal, he would have paid less than 3.5 percent of his income in federal income taxes. Cutting the pass-through rate while repealing the AMT would probably reduce his tax burden to roughly half that level. Instead of paying $38 million, he could’ve paid less than $3 million.

.. A paper by Berkeley economist Stefano DellaVigna and co-authors found that Italian Prime Minister Silvio Berlusconi’s TV network, Mediaset, saw profits grow by at least €1 billion during his time as premier, not necessarily due to graft but because businesses shifted advertising to Mediaset as a way to lobby Berlusconi.

Trump’s Italian Prototype

But the most important – and the most worrying – qualities they share is an ability to substitute salesmanship for substance, a willingness to tell bald-faced lies in pursuit of publicity and advantage, and an eagerness to intimidate critics into silence.

Berlusconi’s policy platforms, even his fundamental ideology, have always lacked consistency. During his successful campaigns, he said whatever it took to win votes; during his three terms in office, he used the same tactic to form coalitions. His only agenda was to protect or advance his own business interests.

.. Berlusconi’s greatest successes – especially during his 2001-2006 and 2008-2011 terms (he also served in 1994-1995) – lay in the manipulation of media and public opinion.

.. He somehow lulled Italians into believing that all was well in their economy and society, even in the wake of the 2008 global economic crisis, when plainly it was not. Under his leadership, Italy lost many years when its government should have been pursuing critical reforms.

.. How did Berlusconi achieve this? For the most part, he used the joke, the lie, and the smile. When that didn’t work, he resorted to bullying, including through libel suits.

.. In fact, few media tycoons – Berlusconi owns Italy’s main commercial television channels and several daily newspapers (either directly or through his family) – have ever been as freewheeling in their use of libel litigation to silence journalists and other critics.

.. (Full disclosure: As Editor of The Economist, I was the target of two libel suits by Berlusconi.)

.. All of these tactics are in Trump’s inventory. Trump is aggressive with his opponents, especially in the media. Throughout his business career, he has frequently invoked libel laws. If he wins the presidency, he has said, he will seek to control media criticism. And yet his essential message is optimistic, delivered with a joke and a big smile.

.. What is important is that both Trump and Berlusconi are ruthless and willing to resort to any means to achieve their (self-serving) ends.

 .. The only way to avoid Berlusconi-level disaster – or worse – is to continue criticizing him, exposing his lies, and holding him to account for his words and actions, regardless of the insults or threats he throws at those who do.

Democrats need to get a grip if they want to win next time

Saying you lost because the system was rigged against you is self-flattery, and it doesn’t help you learn anything about what to do next time.

.. FBI Director James Comey’s interference in the election was inappropriate and quite possibly swayed the outcome. The best way to prevent that from happening again is to do what political parties usually do: nominate a candidate who is not under investigation by the FBI.

.. Clinton failed to offer a compelling message on how she would help middle-income Americans get ahead through work — a failure that has been common for Republican and Democratic politicians in recent years, but that Trump managed to avoid. The next Democratic nominee will need to figure out how to convince voters he or she can succeed in fixing the job market where Trump fails.

Most importantly, Clinton had major conflict-of-interest issues that positioned her poorly to take advantage of Trump’s corruption.

.. Voters were reasonably suspicious of how much money she and her husband had been able to make by monetizing their contacts and influence, and of what favors they might owe as a result of that.

.. Pick a candidate who can capitalize on Trump’s failures

.. A candidate with a better pitch for these voters — one who understood the skepticism of new, complex government programs at a time of low trust in institutions — probably would have beaten Trump.

.. For all the complaining about how unfair everything was this time, Democrats had the easier hand to play in this campaign than Republicans did.

Democrats faced an often-hostile FBI and a meddlesome Russian government. Republicans had Donald Trump at the top of their ticket. I wouldn’t trade.

.. As Luigi Zingales wrote last month, drawing on his experience observing Silvio Berlusconi’s opponents in Italy, the way you beat the inept clown who runs your country is through normal politics. Instead of focusing your message on how ridiculous he is, focus on how what he’s doing isn’t working, and how you have better ideas.

Putin’s Puppet

If the Russian president could design a candidate to undermine American interests—and advance his own—he’d look a lot like Donald Trump.

Over the past decade, Russia has boosted right-wing populists across Europe. It loaned money to Marine Le Pen in France,well-documented transfusions of cash to keep her presidential campaign alive. Such largesse also wended its way to the former Italian premier Silvio Berlusconi, who profited “personally and handsomely” from Russian energy deals, as an American ambassador to Rome once put it. (Berlusconi also shared a 240-year-old bottle of Crimean wine with Putin and apparently makes ample use of a bed gifted to him by the Russian president.)

.. “At least he’s a leader.” And not just any old head of state: “I will tell you that, in terms of leadership, he’s getting an A.”

.. Donald Trump’s interest in Russia dates back to Soviet times. In fact, there’s extraordinary footage of him shaking hands with Mikhail Gorbachev.

.. As it turns out, this Gorbachev wasn’t really the Soviet leader but an impersonator called Ronald Knapp. Trump was lavishing praise on the winner of a look-alike contest.

.. Five separate times Trump attempted Russian projects, hotels, apartments, and retail on the grandest scale. In one iteration, he promised an ice rink, a “members club,” and a spa, for “the finest residences in Moscow.” Another project he described as “the largest hotel in the world.” His gaudy style appealed to Russian nouveau riche, and he knew it. “The Russian market is attracted to me,” he once boasted.

.. Each time he traveled to Moscow for a high profile visit, he attracted press attention and his stature increased. (After one trip, he bragged about a meeting where “almost all of the oligarchs were in the room.”) This elevated profile ultimately attracted investors. Russians helped finance his projects in Toronto and SoH

.. “Russians make up a pretty disproportionate cross-section of a lot of our assets,” Trump’s son, Donald Jr., bragged. “We see a lot of money pouring in from Russia.”

.. Such mercantilist motives likely undergird Trump’s ornate praise of Putin, too. Having a friend in the Kremlin would help Trump fulfill his longtime dream of planting his name in the Moscow skyline—a dream that he pursued even as he organized his presidential campaign. “Russia is one of the hottest places in the world for investment,” he once said. “We will be in Moscow at some point.”

.. One of the important facts about Trump is his lack of creditworthiness. After his 2004 bankruptcy and his long streak of lawsuits, the big banks decided he wasn’t worth the effort. They’d rather not touch the self-proclaimed “king of debt.”

.. This sent him chasing less conventional sources of cash. BuzzFeed has shown, for instance, his efforts to woo Muammar Qaddafi as an investor. Libyan money never did materialize. It was Russian capital that fueled many of his signature projects—that helped him preserve his image as a great builder as he recovered from bankruptcy.

 .. One lawsuit would later describe “Satter’s proven history of using mob-like tactics to achieve his goals.” Another would note that he threatened a Trump investor with the prospect of the electrocution of his testicles, the amputation of his leg, and his corpse residing in the trunk of Sater’s car.
.. What was Trump thinking entering into business with partners like these? It’s a question he has tried to banish by downplaying his ties to Bayrock and minimizing Sater’s sins. (“He got into trouble because he got into a barroom fight which a lot of people do,” Trump once said in a deposition.) But he didn’t just partner with Bayrock; the company embedded with him. Sater worked in Trump Tower; his business card described him as a “Senior Advisor to Donald Trump.”
.. Trump described the scope of their ambitions: “[T]his was going to be Trump International Hotel and Tower Moscow, Kiev, Istanbul, etc., Poland, Warsaw.”
.. Kriss alleged a primary source of funding for Trump’s big projects: “Month after month for two years, in fact whenever Bayrock ran out of cash, Bayrock Holdings would magically show up with a wire from ‘somewhere’ just large enough to keep the company going.” According to Kriss, these large payments would come from sources in Russia and Kazakhstan that hoped to hide their cash. Another source of Bayrock funding was a now-defunct Icelandic investment fund called the FL Group, a magnet for Russian investors
.. These projects are simply too ambitious, too central to his prospects, for Trump to have ignored the underlying source of financing. And it was at just the moment he came to depend heavily on shadowy investment from Russia that his praise for Putin kicked into high gear.
In 2007, he told Larry King, “Look at Putin—what he’s doing with Russia—I mean, you know, what’s going on over there. I mean this guy has done—whether you like him or don’t like him—he’s doing a great job.”
.. Eighteen months after he departed government, he journeyed to Moscow and sat two chairs away from Putin at the 10thanniversary gala celebrating Russia Today. In Politico, an anonymous Obama official harshly criticized Flynn: “It’s not usually to America’s benefit when our intelligence officers—current or former—seek refuge in Moscow.”

The Right Way to Resist Trump

Mr. Berlusconi was able to govern Italy for as long as he did mostly thanks to the incompetence of his opposition. It was so rabidly obsessed with his personality that any substantive political debate disappeared; it focused only on personal attacks, the effect of which was to increase Mr. Berlusconi’s popularity.

.. There will be plenty of reasons to complain during the Trump presidency, when really awful decisions are made. Why complain now, when no decision has been made? It delegitimizes the future protests and exposes the bias of the opposition.

.. Only two men in Italy have won an electoral competition against Mr. Berlusconi: Romano Prodi and the current prime minister, Matteo Renzi (albeit only in a 2014 European election). Both of them treated Mr. Berlusconi as an ordinary opponent. They focused on the issues, not on his character. In different ways, both of them are seen as outsiders, not as members of what in Italy is defined as the political caste.

.. And an opposition focused on personality would crown Mr. Trump as the people’s leader of the fight against the Washington caste. It would also weaken the opposition voice on the issues, where it is important to conduct a battle of principles.

.. with Mr. Trump’s encouragement, the Republican platform called for reinstating the Glass-Steagall Act, which would separate investment and commercial banking. The Democrats should declare their support of this separation, a policy that many Republicans oppose. The last thing they should want is for Mr. Trump to use the Republican establishment as a fig leaf for his own failure, dumping on it the responsibility for blocking the popular reforms that he promised during the campaign and probably never intended to pass. That will only enlarge his image as a hero of the people shackled by the elites.

.. Finally, the Democratic Party should also find a credible candidate among young leaders, one outside the party’s Brahmins. The news that Chelsea Clinton is considering running for office is the worst possible. If the Democratic Party is turning into a monarchy, how can it fight the autocratic tendencies in Mr. Trump?

The United States would survive a Trump presidency – but what about the rest of the world?

Although his personal behaviour is often clownish or boorish, and he has shown astonishing ignorance of some important international issues, Trump has a perfectly coherent world-view and strategy which are rooted in certain established American traditions, even if these are now largely defunct.

.. As for the idea that a Trump presidency would be a disaster, that is completely wide of the mark. It is actually much worse than most people think. President Trump has the potential to be an unmitigated catastrophe – if not for the United States, then certainly for the rest of the world.

.. We should not assume that this is just rhetoric. First, because Trump has been saying all this, or much of it, for years in his writings and in off-the cuff statements. He is no mere opportunist.

.. Trump emerges from the confluence of two long-dormant but now resurgent American political traditions: the blunt, early-19th-century appeal of Andrew Jackson to the “common man” and the protectionist isolationism that produced the Smoot-Hawley tariffs and the Charles Lindbergh of the 1930s.

.. The US is not seriously at risk of lapsing into the kind of populist authoritarianism we see in many other parts of the world. Moreover, the nature of the American constitution is such that Trump will be very constrained in what he can do at home: by Congress, by the courts and various other checks and balances.

..There are far fewer impediments, however, to presidential power in foreign policy. As so much of Trump’s domestic programme depends on what he does abroad, the rest of the world will be much more exposed to a Trump presidency than the Americans themselves.

.. Style will soon become substance. At best, a Trump presidency will lead to the “Berlusconification” of international politics, which will become extended reality-TV events

.. he seems to have a very limited and belligerent idea of what constitutes a successful diplomatic negotiation.

.. Trump views a political “deal” as the imposition of his will on the other side.

.. he writes of one successful transaction in his bestselling book The Art of the Deal, “we won by wearing everyone else down.” It is therefore no surprise that he cleaves to an essentially mercantilist view of world trade in which, say, Japan’s gain is America’s loss. Given his severe anger management issues, the great danger is that a clever adversary will get under his skin, provoke outbursts, and either make a laughing stock of the greatest power on Earth or precipitate a confrontation.

.. He has gone on record as saying that people “are surprised by how quickly I make big decisions, but I’ve learned to trust my instincts and not to overthink things”

.. No reliance should be placed here on the restraining force of his advisers, or of the bureaucracy in the US state and defence departments. Trump has already signalled that he will not listen

.. The foreign policy “team” he has produced during the campaign is the weakest and most obscure that anybody has encountered in living memory.

.. the parallels with his opposition to gun control are evident, is the field of nuclear non-proliferation. He has repeatedly welcomed the idea of a Saudi, or South Korean, or Japanese nuclear bomb. The thinking is that this will achieve a balance of terror, which will keep the peace better than costly American intervention.

.. Even if one thinks – as this author does – that some form of reckoning with China is necessary, Trump is surely the man temperamentally least suited to lead it. His strategy may revive American manufacturing, but modern supply chains are such that China is inextricably stitched into the US industrial ecosystem in ways that could defy safe unravelling.

.. Yet one thing is clear: China, which holds a huge chunk of the US federal debt, will bitterly resist any attempt to repudiate it. Moreover, if unplugged from the US market, particularly at a time of falling European demand, China will face vast economic dislocation and consequent internal unrest. One way or the other, the reaction to any such measures by the Americans will be violent, with a countdown to conflict comparable only to the one triggered by Franklin D Roosevelt’s decision in 1941 to freeze all Japanese assets in the US and impose an oil embargo on Japan.

.. Trump will encourage the European “deplorables”

.. His xenophobia and authoritarian personality will chime with them; his protectionism may even resonate on the European left. He will therefore be much less isolated in Europe than many like to think.

.. The walls will go up across Europe and we may not see them brought down again in our lifetime.

.. But the deadliest threat to European security is Trump’s attitude to Nato.

.. One of Trump’s top military ­advisers, Michael T Flynn, a retired general, is a Russia enthusiast. One of his most trusted former confidants, Paul Manafort, served as a long-term political consultant to the disgraced ex-president of Ukraine and Russian stooge Viktor Yanukovych. One of his few named foreign policy advisers, Carter Page, also has close links to Russia.

.. Yet he seems oblivious to this danger, largely because he does not take Russia seriously in economic terms. It is one of the many failings of his foreign policy, and a surprising one, given his general belligerence, that he does not take other factors, such as ideology or raw military power, much into account.

.. On the other hand, he may prefer to explore a strategic partnership with Trump. That will surely begin with a joint effort to support the Assad regime in Syria, and probably develop into an alliance against China.

.. In that case, we will be in a genuinely tripolar or even quadripolar world, in which the relationship between the Russo-American alliance, the British-European confederation and the other Eastern dictatorship, China, will be one of unstable equidistance.

.. Moreover, Trump will have much of the United States behind him in making his initial foreign policy moves. Demand that the Europeans “pay up” for their own defence? Why not? Beat up on China’s protectionism? What’s not to like? As for Isis, even Homeland’s Peter Quinn thinks that the solution is to “pound Raqqa into a parking lot”. It would take superhuman moral and political courage to stop Trump early on.

.. Many Europeans, in fact, will cheer him on. At home and abroad, Trump will the harvest low-hanging fruit first, and then invest the capital gained in riskier enterprises. When he does really overstep the mark, it will be too late.

 

Is Putin playing Trump like he did Berlusconi?

Putin’s friendship with the Italian may simply demonstrate that the Russian leader has a natural chemistry with a rich, politically incorrect businessman.

.. “Putin is very strategic. He would focus on people’s vulnerabilities — whether their vanity or greed or financial needs.”

.. Putin, drawing from his background as an intelligence officer, had made a “calculated” overture to Trump early in the presidential campaign, “playing upon Mr. Trump’s vulnerabilities by complimenting him,” and turning Trump into an “unwitting agent” of Russia.
Asked about Trump in December, Putin described the New Yorker as “bright and talented,” words that clearly pleased Trump: “It is always a great honor to be so nicely complimented by a man so highly respected within his own country and beyond,” the mogul told reporters soon after.

.. Berlusconi holidayed at Putin’s dacha on the Black Sea, while the Russian stayed at the Italian leader’s villa in Sardinia.

.. At various times Berlusconi defended Putin’s military incursion into the republic of Georgia, which the U.S. and much of Europe strongly denounced. He praised Putin’s leadership style.

.. “In reality, what he was doing was pushing Putin’s agenda with no real guarantee that Putin would ever compromise on our agenda,” says the U.S. official, who spoke to POLITICO. “I see a similar trend with Trump.”

.. the former German chancellor Gerhard Schroeder joined the board of the Russian energy giant Gazprom, and in 2014 he attended a lavish 70th birthday party thrown for him by a Gazprom subsidiary in St. Petersburg