Why Donald Trump wants to hike taxes on hedge-fund billionaires

September 10, 2015
Trump gestures next to an architectural rendering of The Trump Organization's redevelopment of the iconic Old Post Office building into a luxury hotel, in Washington

Donald Trump with an architectural rendering of the Trump Organization’s redevelopment of the Old Post Office building into a hotel, in Washington, September 10, 2013. REUTERS/Kevin Lamarque

Behind the hoopla and the nationalism of the Summer of Trump, a somewhat coherent set of economic policy ideas has begun to trickle out from the leading Republican presidential candidate. Donald Trump has been talking about a massive tax increase on foreign imports. He wants to punish U.S. corporations that “ship jobs overseas.” He also wants to levy a major tax hike on big-shot Wall Street investors by treating carried interest as regular income.

Many on the right dare call it treason. That includes the anti-tax Club for Growth, funded in part by Charles and David Koch, which sparred with the real estate billionaire on Twitter this week. Back in 2011, the group assaulted Trump as “No true believer in free markets,” but just “a chameleon who’ll say anything to get attention.”

Trumponomics presents a conundrum: One of the wealthiest human beings on earth seems to be cribbing from the Occupy Wall Street playbook. While other GOP candidates try to empathize with the anti-elitism within their base, none have the same fire. How can we make sense of this populist mogul? Is the consummate one-percenter a new kind of Republican?

U.S. Republican presidential candidate Trump makes a point as he formally announces his campaign for the 2016 Republican presidential nomination at Trump Tower in New York

Donald Trump announces his campaign for the 2016 Republican presidential nomination at Trump Tower in New York, June 16, 2015. REUTERS/Brendan McDermid

History suggests no. Trump is not a new kind of conservative. But he is a specific type of one-percenter. (Really, 1 percent of 1 percent of 1 percent.) From where the rest of us sit, all billionaires tend to look alike. But now, as in the past, divisions within the economic elite can be fierce, with enormous political consequences.

As a real-estate developer, Trump has a different set of material interests than, for example, the Wall Street investors he maligns with such glee. To understand his economic populism, we have to grapple with the long history of the fractious business elite.

The myth of a unified business community is a powerful one in American history. But it is also largely false. More often than not, competing economic interests have clashed fiercely over the vital issues of the day — from Alexander Hamilton and Thomas Jefferson’s ferocious battles over imposing protective tariffs to the tumultuous fights over airline industry deregulation in the 1970s. (The big carriers fought for the regulations!)

The history of capitalism suggests that sector-on-sector political fighting has been most pronounced when the economy underwent profound structural changes. The rise of industrial capitalism created just such a destabilizing moment. Early factory owners cast themselves as virtuous “producers” — unlike the usurious entrenched wealth of the merchant, banking and slave-holding classes.

In the 1830s, President Andrew Jackson declared war on the Bank of the United States because, as the historian Arthur Schlesinger Jr., put it, “no institution played a more important role in transferring wealth from the producing class to accumulators.”

As industrial capitalism expanded, its practitioners grew bolder in challenging the old order. In the 1850s, New York City’s business elite split bitterly over slavery. Amid violent sectional tensions, Wall Street financiers — deeply tied to Southern cotton picked by enslaved black hands — defended the status quo. Manufacturers, however, flocked to the new Republican Party and its promise of protective tariffs and (eventual) abolition.

By the turn of the 20th century, mass production and the advent of gigantic, monopolistic corporations again ignited fierce conflicts between industries.


Wall Street during the bank panic in October 1907. WIKIPEDIA/Commons

The ruinous Panic of 1907 prompted widespread calls for banking reform — which the well-organized banking community worked hard to lessen. Yet equally powerful industrialists, united in trade groups like the National Association of Manufacturers (still a major business lobby today) fought back. They joined with Progressive politicians in 1913 to enact a centralized financial regulatory program. Today we know the fruit of their labors as the Federal Reserve system.

These historical examples of intra-business political conflict offer two major lessons:

One, financial services — demonized in the populist imagination as more “taker” than “maker” — is a frequent target. Two, major moments of structural change and instability predict when business will train its sights inward. Both observations help make sense of Trump’s economic populism and its successes.

In the past 40 years or so, the mass consumption industrial economy of the post-World War II era has given way to something new — often called “financialization.” Today,  investment and financial speculation generate greater profits than manufacturing, natural resource extraction or service provision. Financial institutions and the elites who run them have become the faces of Big Business, replacing the once-mighty CEOs of U.S. Steel, DuPont and General Motors, who dominated at mid-century.

As early as the 1980s, old-guard industrial executives noted the perils of this transition. In 1987, the Business Roundtable — a consortium of Fortune 500 firms — spoke out loudly against corporate raiders, leveraged buy-outs and short-term stock price manipulation, which have now become the mainstays of the modern economy. Many members of the Business Roundtable banded together in the “Coalition to Stop the Raid on America,” a bipartisan campaign for tougher regulations of hostile takeovers.

A view of The Trump International Hotel & Tower Las Vegas during its official opening in Las Vegas

The Trump International Hotel & Tower Las Vegas during its official opening in Las Vegas, Nevada, April 11, 2008. REUTERS/Las Vegas Sun/Steve Marcus

Financialization is the capitalist disruption of our era, and it is the root of Trump’s economic message. Just as his position on immigration recalls an idealized, earlier (and whiter) America, so too does his attack on Wall Street and global corporations reflect a deeply conservative longing for a bygone epoch in American capitalism. An era when the United States dominated global manufacturing as Europe and Asia dug out from the rubble of war. An era when Big Business didn’t mean investment banks and hedge funds. When it meant domestic production — of steel to make buildings with and airplanes to fly. When business looked… more like him.

Trump is a billionaire with an international brand — very much a beneficiary of the globalized, deregulated economy. His economic identity may make him an unlikely champion of a pre-financialized mode of capitalism. But since luxury hotel construction can’t be easily outsourced — and Trump can invoke the classic manufacturer’s claim of “making,” not “taking” — he has nothing to lose by calling out the hedge fund managers.

Trump’s anti-elitism is neither crass pandering nor a betrayal of his class. Instead, his politics are of a piece with a long history of in-fighting among business elites as well as a nostalgic campaign to revive an older economy, to “make America great again.”


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Trump understand that consumers with more money expand the economy and are the job creators.

Trump also understands that we have a revenue problem, and not a debt problem. That America has been debasing its tax base with tax reductions for the past 50 years.

Posted by Flash1022 | Report as abusive

I agree with trump on raising import tariffs. Raise them back to 30%. America was built on that direct revenue, and that concept. Protectionism works. China still charges us 20-30%, and we charge them 1%. Who is winning that trade war?

We either fight or kneel on knees to China. Protectionism yesterday, protectionism today, protectionism tomorrow. We have a lot to protect.

Posted by Solidar | Report as abusive

“No true believer in free markets,” but just “a chameleon who’ll say anything to get attention.”

That was rich.

Posted by Laster | Report as abusive

How can we make sense of this populist mogul? Is the consummate one-percenter a new kind of Republican?

It’s called a stalking horse, or a pork chop tied around the GOP’s neck so someone will play with them.

How many people reading this article believe this election isn’t a front for the the two dynasties to be determined in the home stretch?

Posted by Laster | Report as abusive

Well of course! THOUSANDS of people have to be making minimum wage for one person to become a BILLIONAIRE off their backs!

Posted by UgoneHearMe | Report as abusive

go trump go

Posted by randyxxx | Report as abusive

Well said, well written.

Posted by OneOfTheSheep | Report as abusive

“..Trump also understands that we have a revenue problem, and not a debt problem…”

i’d like to see your face when US has a debt crisis worse than greece.

the slave owning usa stealing more than 50% from millions of ppl is a disgrace to humanity. the slave owner usa will lose, there are hundreds of countries to choose from.

Posted by yobro_yobro88 | Report as abusive

Trump maybe the right man for a historic time.As a billionaire who made his fortune in real estate(meaning he HAD TO DEAL WITH MONEY LENDERS(INVESTORS )and beat them.He has degree from the prestigious Wharton School -which means as a minimum has a right to say he is bright (in financial matters )and dealing with banks and lenders He knows TARP was socialistic scheme for bailing out failed corrupt so called capitalist banking system and the real costs to the Treasury of outsourcing jobs
For now his sources of support are from know nothing tea party types and to get elected he must get over his egotistical hubris!He has done an apparently superb job of raising his children
He know intuitively market makers make money but do not create jobs but construction does
The ball is in his court ;I hope he does not “double dribble”
Frank Lipsky

Posted by ngc121629 | Report as abusive

I am struggling with how a construction mogul benefits from restricting immigration and imports. aren’t the main inputs in construction semi-skilled labor and raw materials? Wouldn’t more immigration and cheaper inputs make both of those things cheaper? Wouldn’t that make the construction industry more profitable? Granted, Trump’s competitors would benefit from cheaper inputs just as much as he would. However, that is not reason for him to oppose them, at least not necessarily.

Posted by Sewblon | Report as abusive

Excellent analysis:

Producers versus the Parasites.

Those who build versus those who consume what is built.

Posted by IDeeMerk | Report as abusive

The hypocrite of all hypocrites. “If” he’s elected his first order will probably be for ALL federal employees when travelling on government business, stay at a Trump Hotel, at full price, no discounts. He may even make them fly the Trump plane, at full fare!
Just an opinion of mine.

Posted by painman | Report as abusive

“Not everyone who says to me, ‘Lord, Lord,’ will enter the kingdom of heaven, but the one who does the will of my Father who is in heaven.
(Matthew 7:21)

Posted by UauS | Report as abusive

China is not the problem. Iran is not the problem. Isis is not the problem. Russia is not the problem. Islam is not the problem.

WE, each and every one of us, ARE the PROBLEM. We are failing to adapt where adaptation is needed. We are rigid where fluidity is needed. We are callous, where sensitivity is needed. We are greedy, where generosity is needed. We are soft, when we should be tough. We are filled with ego, when we should be humble and thankful. We live in the mind and not in the body. We live in the past and future, and not in the present. WE expect more than we give, and take more than we need.

At every turn we have replaced the broad understanding of the heart with the narrow, precise understanding of the mind. We have replaced the radiant heat of the village bonfire, available to all, with the precision laser of technology, wielded by one.

There is no doom and gloom, though. At any moment, in this moment, each and every one of us can bring ourselves to the present, and make the choice to let go of our past grievances.

Posted by CanyonLiveOak | Report as abusive

Bernie has been talking about these problems all along. Donald Trump is just starting to talk about these issues to get votes. In fact, a significant percentage of his company’s hotels and major real estate properties are located abroad. Trump has imported clothing from China and Mexico produced for his brand, he is part of the problem.

Bernie Sanders Platform on Income Inequality – Demanding that the wealthy and large corporations pay their fair share in taxes. As president, Sen. Sanders will stop corporations from shifting their profits and jobs overseas to avoid paying U.S. income taxes. He will create a progressive estate tax on the top 0.3 percent of Americans who inherit more than $3.5 million. He will also enact a tax on Wall Street speculators who caused millions of Americans to lose their jobs, homes, and life savings.

Reversing trade policies like NAFTA, CAFTA, and PNTR with China that have driven down wages and caused the loss of millions of jobs. If corporate America wants us to buy their products they need to manufacture those products in this country, not in China or other low-wage countries.

Posted by 2-b-free | Report as abusive

The devil is in the details. Washington DC is fundamental to centralized profiteering. Trump wants to build his hotels all over the world. Wall Street banks want to finance anyone as long as there is no risk and high profit for them. Being President removes the risk. But who is actually in control? How deep is the ocean.

Posted by ToIsleOfView | Report as abusive

What does trump say about citizens united. What are his plans for supreme court nominees?

The biggest problem we have is lobbyists own our representatives.

Were is trump on getting money out of politics?

He’s just to much of an egomaniac to do this country any good.

Posted by michaelryan | Report as abusive