Senator Chuck Schumer is vowing to go after Trump for his new “developer tax credit.”
Trump is trying to push through a $1 trillion infrastructure program, which would rely on private investment rather than public monies. On the face of it, it sounds like a good idea – that is, to not add to the budget deficit – but what’s most troubling about the program is that it looks like one big giant Ponzi scheme.
“We will not support tax credits for developers,” Schumer told reporters.
Paul Krugman, the Distinguished Professor of Economics at the Graduate Center of the City University of New York, is also calling it exactly that – a huge scam that he says will only serve to benefit a few wealthy individuals. Not only will they get tax cuts, but future profits from the endeavor. Rather than them funding the government, the government will be funding them via no taxes.
Krugman further pointed out that while Trump’s plan wouldn’t require government investment up-front, taxpayers would end up footing the bill that would be “every bit as high if not higher.”
“Instead, (the Trump team) calling for huge tax credits: billions of dollars in checks written to private companies that invest in approved projects, which they would end up owning. For example, imagine a private consortium building a toll road for $1 billion. Under the Trump plan, the consortium might borrow $800 million while putting up $200 million in equity — but it would get a tax credit of 82 percent of that sum, so that its actual outlays would only be $36 million. And any future revenue from tolls would go to the people who put up that $36 million.”
While it’s understandable Trump would want to improve the nation’s eroding infrastructure, this just isn’t the way to do it. The fact that Trump is himself a developer is also worrisome. While he has handed control of his company to his sons, that still doesn’t dissolve himself of putting his hand into something that could potentially benefit himself financially at a later date, as well as his family.
Here’s Senator Schumer talking about how he ‘worries’ about Trump and his plan to benefit wealthy people just like himself:
Featured Image via Getty Images.