One of the tax systems in the US is for wage earners. The government takes money from them out of each paycheck - so it knows how much they make, and those workers can't cheat to any significant degree. But the other tax system is for capital. Those with capital get to tell the government what they want to tell. They may get audited, but if their tax returns are of any size the government doesn't have enough of the smart auditors to figure out what's really going on. And there are the rules that allow you to do things like take in money today and pay taxes on it thirty years from now.

You, as a wage earner have to pay your taxes every year on your income for that year. So if you have a one-time windfall that makes you a lot money you could end up in the top tax bracket. But if you're a corporation you are allowed to reach forward with deferrals for years. Over a 45 to 50 year period, you can balance out the winning years and the losing years in such a way that you pay very little tax, especially considering the time-value of the money.

Politicians like to talk about the income tax when they talk about overtaxing the rich, but the income tax is just one part of the total tax system. There are sales taxes, Medicare taxes, social security taxes, unemployment taxes, gasoline taxes, excise taxes - and when you add up all of those taxes [many of which are quite regressive], and then you look at how they affect the rich and the poor, you essentially end up with a system in which the best off 20 percent of Americans pay one percentage point more of their income than the worst off 20 percent of Americans.

When you say the tax system benefits the rich, there are a lot of people who respond, "That can't be true, look at the rate of tax. The people who are rich pay a higher rate than you or I." Well, yeah, but if you don't have to pay taxes on a lot of your income, then your real tax rate is a lot lower. And if you're allowed to pay your taxes thirty years from now instead of today then you're a lot better off. People need to have a sophisticated understanding of how the system works to appreciate that the posted tax rate really has very little to do with the taxes people pay.

Congress is supposed to fund the IRS, and it has been steadily reducing the number of auditors and tax collectors the IRS has at the very time that the tax system has become vastly more complicated. And of course America continues to grow, so there's an increasing number of tax returns coming in. The IRS responds by doing exactly what Congress expects of them. That shouldn't surprise anyone. All bureaucracies do what they are told.

In 1990, about 1 percent of American corporate profits were taken in tax havens like the Cayman Islands. By 2002, it was up to 17 percent, and it'll be up to 20-25 percent very quickly. It's a major problem. Fundamentally, we have a tax system designed for a national, industrial, wage economy, which is what we had in the early 1900s. We now live in a global, asset-based, services world. And we need to have a tax system that follows the economic order or it's going to interfere with economic growth, it's going to reduce people's incomes, and it's going to damage the US.

Donald Trump is a master salesman. And he creates his own reality. So if he tells you, "This is a middle-class tax cut, and I, Donald Trump, won't benefit," he expects you to believe that. It doesn't matter that it's not true. It's he said it, you're supposed to believe it. And that's how he's run his entire administration. If he says it, that makes it true.