Republican presidential candidate Donald Trump promises “biggest tax revolution since Reagan” at an economic policy speech to the Detroit Economic Club, Monday, Aug. 8, 2016. (AP Photo/Evan Vucci)
Say what you will about the Republican Party’s nominee for President, this week Donald Trump delivered details of his economic plan for the country and the news is good for growth. While some of his other policy proposals are far outside what most Americans could support, his pro-growth, job creating tax policies are an encouraging move in the right direction. They create a clear and important distinction between his vision for a stronger and more vigorous country and that of Democratic nominee Hillary Clinton. According to Mr. Trump, “The one common feature of every Hillary Clinton idea is that it punishes you for working and doing business in the United States. Every policy she has tilts the playing field towards other countries at our expense.”
Trump promises to offer the “biggest tax revolution since Reagan”. He proposed lowering the corporate tax rate to 15 percent from the current 35 percent and a reduction in the number of individual income tax brackets from seven to three, modeling the same ranges that House Republicans support: 12, 25 and 33 percent. This signals an important policy accord with House speaker Paul Ryan and other fiscal conservatives across the country. He also proposed a discounted 10 percent tax for businesses that currently claim profits held overseas if they move those profits back to the U.S.
Trump’s family-friendly tax break will allow parents to fully deduct childcare, a move that may play well with some voters is a bit misguided in that it has been posited that this maneuver will benefit wealthier families as lower income families take the standard deduction rather then itemizing on the federal tax return.
Simplifying filings and compliance requirements is also a key component; “Our tax code is so burdensome and complex that we waste $9 billion hours a year in tax code compliance.”
The Obama administration’s history-making regulatory over-reach also ranks high on his list of economic reforms. He references a report by the Competitive Enterprise Institute that estimates the Obama administration regulatory largess has imposed nearly $2 trillion in regulatory costs and a Federal Register that now contains more than 81,000 pages, an all time record.
Trump took aim at destructive and costly regulatory impositions of the last eight years, “President Obama has issued close to four hundred new major regulations since taking office, each with a cost to the American economy of $100 million or more. In 2015 alone, the Obama Administration unilaterally issued more than 2,000 new regulations – each a hidden tax on American consumers, and a massive lead weight on the American economy. It is time to remove the anchor dragging us down, and that’s what it’s doing – it’s dragging us down. Upon taking office, I will issue a temporary moratorium on new agency regulations.”
More evidence can be found in this Wall Street Journal article, which clearly shows that seven years after the Great Recession of 2008 ended, the annual rate of economic expansion “has been by far the weakest of any since 1949.”
Closing special interest and corporate loopholes that only benefit the wealthy or a particular business or industry is another critical step in the move to create a fair and just tax system. Trump wisely proposes eliminating the carried interest deduction, which allows high earning money managers to count earnings as capital gains (taxable rate of 23.8 percent) instead of ordinary income (taxable rate of 39.6 percent). According to the Congressional Budget Office, this move could generate as much as $17 billion in ten years.
Taken as a whole, while imperfect and short on details, Trump most current tax reform promises are on the right track and a significant effort to unify fiscal conservatives and move the country out of its economic lethargy toward a system that doesn’t favor the wealthy and special interests.