Election 2016: Trump Sets Himself Apart on the Economy
On Monday, Republican frontrunner Donald Trump announced his economic policy. Speaking from his headquarters in Trump Tower, The Donald distinguished himself in the crowded field with pledges well outside of contemporary party orthodoxy.
Some of the plan’s provisions look similar to those of Trump’s fellow candidates. For example, he calls for a reduction of tax brackets from seven to four, with the top rate dropped from the current 39.6% to 25%. He also proposes dropping corporate taxes to 15%. However, that is where the similarities end. While some of Trump’s fellow candidates call for reduced tax rates, the breaks tend to be for the benefit of wealthier Americans.
Jeb Bush’s plan, for example, helps middle class Americans to a degree, but the biggest breaks are for millionaires. Trump, on the other hand, proposes to eliminate many taxpayers toward the bottom of the economic pile, calling for the elimination of income taxes for citizens earning less than $25 thousand a year. More importantly, he calls for closing many of the loopholes that have benefited large businesses and for the taxing of carried-interest (income from investing) at the same rate as other income.
What Trump is essentially promoting is a tax regime that in practical terms increases taxes on the financial sectors wealthy folks including, it may turn out, himself. Trump has stated he would likely pay more taxes under his plan. For many spectators this is a welcome change from Jeb’s plan that would cut his own taxes by $3 million.
What does all this mean? Well, it is certainly different. Trump has been promising to get rid of carried-interest benefits (a view that happens to be shared by Bernie Sanders and Hillary Clinton, his Democratic opponents) for a while. Standing behind that pledge certainly sets him apart.
Trump’s plan shows a shrewd, but potentially dangerous strategy: he is fighting for the middle and working class voters, but is likely going to alienate the moneyed classes. Traditional views on primary voters are that they are skeptical of all taxes, even when they affect another class of people entirely. Many voters have been swayed in the past by the claim that such taxes are “job killers”.
Yet Trump has built a strategic bulwark with promises to cut corporation taxes and the like. The American public is fairly fed up with the finance world already. The old anti-tax bromides may not convince them any longer.
Let’s see if the gamble pays off.