David Farenthold of the Washington Post on Tuesday broke a huge story about the rampant wrong-doing at the Trump Foundation. Donald Trump, Farenthold revealed, "spent more than a quarter-million dollars from his charitable foundation to settle lawsuits that involved the billionaire's for-profit businesses."
But if the Republican nominee's "self-dealing" as president of the Trump Foundation likely violated the law, the real estate magnate is trying to perpetrate a much larger scam to enrich himself at the expense of American taxpayers. And this other Trump con, a trillion-dollar shell game with the U.S. tax code, is completely legal.

Here's how the scheme works. Last week, Donald Trump unveiled the third version of his tax plan in under a year and the second in just the last six weeks. The biggest change from August was the decision to seemingly abandon his proposed 15 percent corporate tax rate for "partnerships, limited liability companies and other businesses known as pass-throughs." But as the New York Times documented on September 16, that announcement represented "Conflicting Policy From Trump: To Keep, and Remove, Tax Cut."

A few hours after Donald J. Trump publicly backed away from a $1 trillion tax cut for small businesses, campaign aides on Thursday privately assured a leading small-business group that Mr. Trump in fact remained committed to the proposal -- winning the group's endorsement.
The campaign then told the Tax Foundation, a conservative-leaning Washington think tank it asked to price the plan, that Mr. Trump had indeed decided to eliminate the tax cut.
Call it the trillion-dollar lie: Both assertions cannot be true. [Emphasis mine.]

But Trump's misdirection wouldn't just cost the United States Treasury an estimated $1.5 trillion over the next decade. Keeping that pass-through payday for plutocrats would also redirect millions of dollars from Uncle Sam to Donald J. Trump and family--every year. As Trump's tax attorneys explained in his campaign's March 2016 required financial disclosure:

"You hold interests as the sole or principal owner in approximately 500 separate entities. These entities are referred to and do business as The Trump Organization. ... Because you operate these businesses almost exclusively through sole proprietorships and/or closely held partnerships, your personal federal income tax returns are inordinately large and complex for an individual."

And that would mean really YUGE savings for The Donald if his "now you see it, now you don't" tax cut is still on for January 20, 2017.
As the Center on Budget and Policy Priorities (CBPP) recently explained, "Pass-through income is claimed by business entities that aren't subject to the corporate income tax, which currently has a top statutory rate of 35 percent (though most corporations pay an effective tax rate considerably lower than 35 percent). Pass-through income is business income that "passes through" the business and is instead reported on the individual tax returns of the business owners and taxed at the owners' tax rates."

But as CBPP also documented, "'pass-throughs' are not synonymous with 'small businesses' and "pass-through income is highly concentrated at the top:"

Mr. Trump, who has proposed a 15 percent corporate tax rate, proposes a pass-through rate of 15 percent as well. The Trump pass-through proposal would be an expensive tax cut that would flow primarily to the wealthiest Americans. That's because more than two-thirds of pass-through business income flows to the highest-income 1 percent of tax filers.
Many businesses, such as law firms, and groups of wealthy investors choose to be taxed as pass-through entities instead of as corporations and often do so to lower the overall taxes they owe. In recent decades, many businesses and their owners have reaped sizable tax savings by doing so. A special 15 percent tax rate on pass-through income such as the Trump tax plan proposes would offer them another large tax cut.

As the Washington Post reported, "Trump would tax pass-through income at a rate of 15 percent, compared to the 40 percent personal income tax rate a wealthy business owner would pay today." And as the Post's Jim Tankersley explained, one of those wealthy business owners is Donald Trump himself:

A little-noticed provision in Donald Trump's tax reform plan has the potential to deliver a large tax cut to companies in the Republican presidential nominee's vast business empire, experts say.
Trump's plan would dramatically reduce taxes on what is known in tax circles as "pass-through" entities, which do not pay corporate income taxes, but whose owners are taxed at individual rates on their share of profits. Those entities are the most common structure for small businesses and increasingly popular for larger ones as well. They are also a cornerstone of the Trump Organization. On his 2015 presidential financial disclosure report, Trump listed holdings of more than 200 limited liability corporations, which is a form of pass-through.

It's no wonder Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center, said "It's a really nice deal" for Trump and pass-through owners like him. As for Uncle Sam: not so much. Last year, a team of economists led by Michael Cooper of the Treasury Department found that pass-through entities now account for half of the business income in the United States, up from one-quarter in 1980. A study by the Center for American Progress concluded that the rise of pass-throughs cost the federal government nearly $800 billion in tax revenue between 2003 and 2012. Trump's self-serving plan would make that trend much, much worse. (For a real-world example from the meth labs of democracy, just look at Kansas. There, the elimination of the tax on pass-through businesses and family farms didn't deliver the economic growth Sam Brownback, Stephen Moore, and Arthur Laffer promised, but a dramatic and dangerous decline in state revenue.)
For his part, in August Trump economic adviser Stephen Moore protested that the candidate's proposed payday "wasn't something we took into consideration when we made this plan." But the Heritage Foundation's resident supply-sider in chief, banned in 2014 from the op-ed pages of the Kansas City Star for fabricating data, is now helping Trump sow confusion over the status of the pass-through tax cut proposal. As Bloomberg News reported on Monday:

Adding to the confusion, the campaign on Monday morning posted a brief statement titled "Trump policy on business taxes" to its website, but then soon removed it. The statement said businesses could choose how they wanted to be taxed, according to a screenshot made before it was withdrawn.
Stephen Moore, an economist who has been advising Trump, said little to clarify the situation Monday. The campaign will work on the issue with the Republican-led House Ways and Means Committee, which writes tax policy, he said.

(If that "House Ways and Means dodge sounds familiar, it should. It's the same one current House Speaker Paul Ryan has used for years to avoid explaining which tax breaks and loopholes he'd close to fill a $6 trillion hole in his ten-year budget plans.)
Now, #DoOverDonald is trying to have it both ways on his tax plan. On the one hand, he's trying to win over deficit hawks by supposedly getting rid of a tax cut that would balloon his red ink from $4.4 trillion to $5.9 trillion over the next decade, according to the reliably Republican Tax Foundation. (As the Wall Street Journal put it, "the $1.5 trillion gulf in the estimate [is] caused by the campaign's conflicting and blurry statements on a key feature of business taxation.") On other, he's trying to bribe small business groups by simultaneously claiming--nod, nod, wink, wink--the pass-through scheme is still part of his plan.
Either way, Donald Trump and his kids will win big. After all, his campaign finance disclosures claim he has a net worth of $10 billion and earned $557 million between January 2015 and May 2016. While his income sources are no doubt diverse, President Trump would surely reap millions from candidate Trump's income tax and capital gains tax rate reductions alone. And if he is telling the truth about his net worth, The Donald's heirs could pocket over $7 billion from his promise to do away with the estate tax now paid by only the richest 0.2 percent of family fortunes.
Because Trump refuses to make public even one year of his returns, Americans have no idea how much he makes, how much he pays (if anything) to the IRS, what his tax rate is and what (and whether) he gives to charity at all. There are only two things we know for certain about Donald Trump's taxes. First, he was lying when he made this boast as he announced the first version of tax plan back in September 2015:

"It reduces or eliminates most of the deductions and loopholes available to special interests and to the very rich. In other words, it's going to cost me a fortune -- which is actually true -- while preserving charitable giving and mortgage interest deductions, very importantly." [Emphasis mine.]

The other certainty of Donald Trump's tax cut snake oil is that Uncle Sam will lose big as tax revenue passes-through to Donald Trump and his gilded-class ilk. But that will only happen if Americans fall for his biggest self-dealing con of all.