In an interview that aired Sunday on 60 Minutes and a press conference today, Republican presidential candidate Donald Trump struck a seemingly populist tone on trade and taxes with promises to dump unfavorable trade deals and increase taxes on the wealthy.
According to Trump, if elected he will renegotiate or break the North American Free Trade Agreement (NAFTA) and put tariffs on goods from countries like China and Mexico if they engage in unfair trading practices. That unilateral behavior, often called protectionism, would also essentially break current US commitments to the World Trade Organization (WTO).
Trump also laid out a tax plan at a Monday press conference that he claimed would reduce taxes for middle and lower income Americans while removing deductions for the rich. Under the plan, Trump claims, individuals making less than $25,000 a year and married couples making below $50,000 a year would pay zero income tax.
Reviews of the tax plan cast doubt on whether or not the rich will actually pay more under the Trump plan. The Wall Street Journal notes that the plan, though arguably better for middle income Americans than the one offered by Jeb Bush, would still eliminate the estate tax.
The estate tax taxes the inheritance received by people from wealthy estates and is only even applicable in multi-million dollar estates after recent reforms. Needless to say, the vast majority of Americans will receive no benefit from the elimination of the estate tax.
The Trump plan reportedly calls for closing the carried interest loophole for hedge fund managers as well as taxing overseas corporate profits at 10% in order to force corporations to repatriate money back into the US.
The biggest claimed shift would be in what deductions could be used when filing federal taxes. Middle income Americans would reportedly keep all their deductions with wealthier Americans keeping some of their deductions while the super rich and corporations will lose many of theirs. All taxpayers would reportedly keep charitable giving and home mortgage-interest deductions.
Question remains over whether, as Trump claims, these changes will be “revenue neutral” — especially given that Trump said in the press conference that his plan relies on a US GDP growth rate of at least 3% — or that rich people will actually pay more.
But regardless of how the plan matches up to reality, the tax and trade agenda Trump laid out diverges considerably from Republican economic orthodoxy and, if it proves a hit with the GOP’s voter base, other candidates may have to adopt some of its provisions.