Nick Hanauer is not impressed with President Donald Trump’s new tax reform plan.
The Seattle investor and co-founder of Second Avenue Partners has more than a few choice words about the federal tax overhaul the Trump administration plans to introduce Wednesday. He shared his thoughts on a press call with Sen. Ron Wyden, a Democrat from Oregon, Local Steelworkers Union President Robert James, and liberal-leaning economic policy experts Seth Hanlon and Michael Linden Wednesday.
“To me, selling giant tax cuts to rich people as responsible tax reform is like giving whiskey and car keys to teenage boys and calling it responsible parenting,” Hanauer said. “It’s nuts. I think we all have a responsibility to come together and try to let the American people know that tax cuts for rich people disguised as reform is just a grab by the very rich from ordinary Americans and it shouldn’t happen.”
Under the proposed plan, the federal tax code would undergo the most dramatic changes in decades. They include compressing the tax brackets from seven to three; reducing middle-class taxes by doubling the standard deduction; killing the estate tax; and reducing the corporate tax rate from 35 to 20 percent, according to The New York Times. The Republican plan would also tax income from “pass-through” businesses, like LLCs, at 25 percent, rather than the rate of the individual owners of the business.
Republicans say the plan will boost the U.S. economy and benefit middle and low-income Americans, but Hanauer isn’t buying it.
“What 40 years of trickle-down economics has done is pushed in people’s heads the idea that lower taxes are somehow magically good for the economy and good for families but it’s just factually incorrect,” he said on the call. “The challenge our economy faces is that we’re not innovating enough and people’s incomes are not high enough. That’s because wages have been suppressed and taxes have been cut for rich people, which has made it very difficult for us to fund the infrastructure and investments we require.”
Previously: Seattle tech investor’s message to the elite: Fighting Trump means forking over some wealth and paying workers fair wages
Hanauer is no stranger to incendiary political rhetoric. In addition to co-founding tech venture capital firm Second Avenue Partners, he is also behind the progressive policy group Civic Ventures. Over the years he’s earned a reputation as a political rabble-rouser and champion of Seattle’s move to the $15 minimum wage. Hanauer is also known for having his finger on the pulse of emerging tech trends. He was an early investor in Amazon and backed biotech company Juno Therapeutics before its meteoric rise.
The press call was organized by Not One Penny and the Center for American Progress’s HandsOff initiative — campaigns focused on fighting the Trump administration’s budget and tax cuts. On it, Sen. Wyden accused Republicans of offering “giveaways for campaign coffers, sweetheart deals for powerful CEOs, and a new way to funnel big tax breaks to Mar-a-Lago’s most loyal members.”
Republicans, on the other hand, say the plan will make the tax code more fair, create jobs, and eliminate loopholes for the wealthy.
Reforming our broken tax code is critical to economic growth and job creation. https://t.co/GUZtR31f4S
— Rep. Steve Scalise (@SteveScalise) September 27, 2017
On the call Wednesday, Hanauer noted that the plan may not be as progressive as it appears when it comes to taxing the rich.
“I think it’s super important to remind people that ordinary income isn’t where rich people get their income,” he said. “We get our income from capital gains and dividends, which are taxed at a much, much lower rate than ordinary income … so if 95 percent of your income is capital gains and dividends, the actual tax rate you’re paying on your income is lower than middle-class people.”
Trump will formally announce the tax reform bill at an event in Indianapolis Wednesday afternoon.