Donald Trump is finally showing us more of his economic plan beyond the “Make America Great Again” slogan on his red hat.
America has now learned:
— He wants to tax the rich more and the middle class less.
— He wants to lower corporate taxes.
— He wants to cut government spending and stop raising the debt ceiling.
“The hedge fund people make a lot of money and they pay very little tax,” Trump said in an interview Wednesday with Bloomberg. “I want to lower taxes for the middle class.”
In short, Trump is willing to raise taxes on himself and those like him.
Many hedge fund managers and real estate investors are able to list their earnings as “carried interest” because of an IRS tax rule. They are able to cast their earnings as investment gains instead of income, which allows them to be taxed at a lower rate.
“You’ve seen my statements. I do very well. I don’t mind paying a little more in taxes. The middle class is getting clobbered in this country,” he said.
Eliminate “inheritance” tax or worry about inequality
Trump has been all over the place on taxes over the years. He criticized President Obama for not wanting to keep the Bush tax cuts in place on the wealthiest Americans. He has also proposed eliminating the so-called “estate tax” on people that inherit money, gifts and property from their parents. Both moves would be a major gain for the rich.
Now Trump is starting to sound more populist.
“The middle class built this country, not the hedge fund guys,” he said Wednesday.
“One of the reasons he is winning votes is he’s talking about the macro issues that so frustrate many Americans and seem so blatantly unfair,” says Peter Morici, a professor of economics at University of Maryland’s Robert Smith school of business.
Lower corporate taxes and bring $2.5 trillion home
Trump also wants to even the playing field on taxes that businesses pay. He believes that lowering the corporate tax rate will stop American companies from trying to move their headquarters — and possibly jobs — overseas in an effort to dodge taxes in the U.S.
Many U.S. companies such as Apple have huge cash reserves that they could spend on growing their businesses, but that money is mostly held overseas to avoid U.S. taxes. Trump estimates as much as $2.5 trillion could return to America if taxes were lower.
“This is money that could be spent in this country,” he said. “We have companies with thousands of jobs that are leaving this country.”
Washington is full of “scandalous” waste
Trump was also asked about whether he would continue to raise America’s debt ceiling.
The standoff between President Obama and Republicans in Congress over whether to raise the ceiling in 2011 caused U.S. debt to lose its AAA rating.
Republicans should fight Obama again over the issue, Trump argues, even if it causes pain in financial markets.
“I think there’s so much waste, so much scandalous waste in Washington that we shouldn’t have to [raise the debt ceiling],” he said.
Trump continues to lead the GOP field solidly. Rivals accuse him of not having real plans.
“The big issues he talks about do make some sense,” says Morici. “The question is…is there really much substance there or is this just a few phrases?”