Donald Trump gave a major speech on his proposed economic policy in Detroit this morning, looking to flesh out ideas he had been talking about since the campaign began.
Using a teleprompter, Trump issued a laundry list of reforms, including allowing child care expenses to be deducted, simplifying and reducing taxes, freezing financial regulations, and using his executive power to renegotiate trade agreements.
Republican presidential nominee Donald Trump on Monday outlined a proposal to allow families to deduct child-care spending from their income taxes as part of a broader effort to slash taxes.
It wasn’t clear how such a tax break might be structured and whether it would be available to tens of millions of families that don’t pay income taxes because they have lower incomes. Making child-care expenses fully deductible would provide much larger benefits to the wealthiest families that have larger tax bills.
Mr. Trump also called for a temporary moratorium on all new regulations from federal agencies and would seek to roll back rules that reduce employment. A campaign adviser said that review could target a series of environmental rules issued by the Environmental Protection Agency to curb carbon-dioxide emissions from power plants and to bring more waterways and wetlands under federal protection.
It isn’t clear how such a moratorium would apply to financial regulators, whose agencies enjoy greater independence from the executive branch.
At the same time, Mr. Trump has promised to aggressively use executive power to renegotiate trade agreements, to label foreign countries as currency manipulators and to apply tariffs and other penalties to trading partners.
Informal advisers to Mr. Trump have for weeks said the nominee would unveil a revamped tax-cut proposal. One campaign official said Mr. Trump’s tax plan would now include just three income-tax brackets, instead of four.
The earlier proposal, released last September, would sharply lower income-tax rates on individuals and businesses. The Tax Policy Center, a nonpartisan project of the Urban Institute and Brookings Institution, has said the plan would reduce federal revenue by $9.5 trillion over a decade, making it far larger than the tax cuts enacted last decade by President George W. Bush.
Trump is silent on how we’re going to pay for the tax cuts and child care deductions. Certainly increased growth in the economy will make up some of the slack, but we’re looking at some scary deficits regardless. With that in mind, Trump increased his proposed top tax rate from 25% to 33%. That will help but it still comes up short.
A lot will depend on how broadly Trump wants to draw the tax deductions for childcare. If the deductions are universal, it will cost a fortune. But if they are targeted deductions for the Middle Class, it would be a boon to working parents who spend up to a quarter of their weekly earnings on childcare.
Trump is sticking with his call to cut the business tax rate to 15%. Congress has been wrestling with the issue for 2 years and has failed to come together on how to pay for it. Apparently, closing loopholes is a lot harder than previously thought, and unless more revenue can be found, passage is not likely no matter who is president.
There’s not much to criticize in Trump’s plan if you’re a Republican. There’s something in there for everyone; tax cuts for the supply siders, “compassionate” conservatism, and for the hawks, increased military spending.
But paying for all this has never been more difficult. With Congress divided and the shrinking discretionary spending budget, there just aren’t a lot of places where you can find a few tens of billions of dollars to cut in order to make the plan revenue neutral.