In his first economic speech since announcing his economic team late last week, Republican presidential candidate Donald Trump laid out his “economic vision” Monday before the Detroit Economic Club, along with criticism of his opponent Hillary Clinton.
“She is the candidate of the past. Ours is the campaign of the future,” said Trump.
Then, after noting that “taxes are one of the biggest differences in this race,” Trump iterated his plans to slash taxes for corporations and individuals. Throughout his one-hour speech, Trump was interrupted by protests, then paused until the cheering restarted, thanked his audience and returned to his speech.
“Under my plan, no American company will pay more than 15% of their business income in taxes,” announced Trump.
He would cut the top corporate tax to 15% from 35%, allow businesses to immediately expense new business investments and allow corporations to repatriate overseas profits after paying a 10% tax.
“We punish companies for making products in America — but let them ship products in to the U.S. tax-free if they move overseas. This is backwards.”
For individual taxpayers, Trump would cut the number of personal income tax brackets from seven to three: 12%, 25% and 33% (the current top bracket is 39.6%).
He calls this “an across-the-board income tax reduction, especially for middle-income Americans,” but the biggest reduction appeared to be for wealthier Americans – those whose marginal tax brackets were 28% or greater. (There are currently four tax brackets above 25%: 28%, 33%, 35% and 39.6%, and only two below 25%: 15% and 10%).
Trump also pledged to repeal the estate tax, which is levied on estates above $5.45 million. “No family will have to pay the death tax. American workers have paid taxes their whole lives, and they should not be taxed again at death,” said Trump.
According to the Tax Policy Center, the estate tax applies only to the wealthiest Americans, and the top 1% of taxpayers account for 75% of the estate taxes collected in the U.S.
Trump said, however, that “the rich will pay their fair share,” and he would “eliminate the carried interest deduction and other special interest loopholes that have been so good for Wall Street investors, and people like me, but unfair to American workers.”
He also said he would allow parents to fully deduct the average cost of child care spending from their taxes and noted that he would be rolling out proposals to increase choice and reduce cost in child care in the “coming weeks.” but provided no details.
Trump promised “to cut regulations massively,” issuing a “temporary moratorium on new agency regulations,” and canceling “all illegal and overreaching executive orders” instituted under the Obama administration.
He did not provide specifics, but presumably that could include the Department of Labor’s fiduciary rule as well orders to expand the right to overtime pay for workers and set a minimum $10.10 an hour wage for workers of federal contractors.
Trump said he would “unleash a new energy revolution,” noting that Obama’s regulation to limit emissions at coal-burning plans has caused plants across Michigan to have “either shut down entirely or undergone expensive conversions,” but the Supreme Court overturned that ruling, along with the administration’s plans to expand immigration.
Trump went beyond his usual opposition to the Trans-Pacific Partnership (TPP) trade deal to announce that he would renegotiate NAFTA – the North American Free Trade Agreement with Canada and Mexico – which was enacted under Bill Clinton’s presidency. “If we don’t get a better deal, we will walk away.”
He said that Hillary Clinton supported NAFTA and despite her recent opposition to the TPP would enact it. “Guaranteed. Her donors will make sure of it,” said Trump.
But much of Trump’s trade talk was focused on China, which he says is “responsible for half of the U.S. trade deficit” and breaks international trade rules, dumping products, manipulating its currency and stealing intellectual property. He said he would impose tariffs on “countries that cheat by unfairly subsidizing their goods.”
Despite his criticism of past and pending trade deals, Trump said he was “in favor of trade and “isolation is not an option, only great and well-crafted trade deals are.”
When asked for his reaction to Trump’s speech, Mark Zandi, chief economist at Moody’s Analytics, said “it was very general” and lacked specifics about whether the plan would substantially increase the budget deficit. “His previous plan did, and thus hurt the economy’s growth prospects. Nothing he said today would materially change my thinking on this, but again we need to see more details to know for sure.”
— Related on ThinkAdvisor:
- Why Gundlach Predicts a Trump Victory
- Clinton vs. Trump: 2 Wildly Different Tax, Economic Plans
- How the Clinton, Trump Estate Tax Plans Could Affect the Economy