Posted August 10, 2016 Klark Schoburgh
Donald trump revealed his economic plans this week which drew an unsurprising mixed reaction. He proposed a cut in top tier tax, cut in corporation tax, and an axe to regulation. Trump wants to simplify the tax code to just three brackets from the current seven, 12, 25 and 33 percent. ‘The rich will pay their fair share, but no one will pay so much that it destroys jobs or undermines our ability as a nation to compete...These reforms will offer the biggest tax revolution since the Reagan tax reform, which unleashed years of continued economic growth and job creation’, the GOP presidential nominee told the Detroit Economic Club.
Trumps decision to speak in Detroit was no coincidence. He repeatedly used Detroit as an example of how he believes Democratic policies, supported by his opponent, Hillary Clinton, have devastated American manufacturing. “The city of Detroit is the living, breathing example of my opponent’s failed economic agenda. Every policy that has failed this city and so many others is a policy supported by Hillary Clinton,” he said. The message was clear, vote for trump, or Detroit will be extrapolated across America.
He promised no business will pay more than 15% in tax, down from the current maximum of 35%, in a move long advocated by Republicans, in an attempt to stem the tide of US companies moving headquarters overseas. He also pledged to levy a one-off 10% tax on trillions of dollars in corporate profits now parked abroad, in a bid to lure them home. With apple alone rumoured to hold over $180billion in cash overseas, this will be an incentive to repatriate the cash. Although recent Dollar strength could be a hurdle to its efficacy.
The tax proposal, which came alongside a pledge to unwind trade deals unless they benefitted the US, drew a cautious welcome from the business community, often at odds with trump.
During the speech, that was repeatedly interrupted, he repeated common campaign themes of scrapping ObamaCare, renegotiating NAFTA, and opening up new territory for energy exploration including opposing Obamas ban on the keystone pipeline.
Trump attempted to refocus his cannon on Mrs Clinton by insisting that her economic policies would lead to higher taxes and stifling regulation. He continued, ‘if you were a foreign power, looking to weaken America you couldn’t do better than Hillary Clintons economic agendas, every policy she has tilts the playing field to other countries at our expense.’
A popular proposal was repealing the estate tax, or “death tax,” as critics call it. “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. It’s just plain wrong”. Also of note was the proposed tax breaks on childcare costs, which will come as a relief for many.
As with everything about Mr Trump, this is a plan that is bold and flashy, that will cause a prolonged debate about its efficacy, practicality and affordability.