At a speech in Detroit in August, presidential candidate Donald Trump (R) relaunched his to-do list for economic reform if elected in November.
Trump had already announced his tax policy proposals in a September 2015 speech, revising them over the past 11 months with the guidance of an economic policy team including notable business figures and investors.
During the Detroit speech, Trump proposed cutting tax rates, consolidating tax brackets, and eliminating tax loopholes. Trump also promised to ensure “the rich will pay their fair share,” as part of his envisioned tax reforms.
Different Steps, Same Path
Grover Norquist, president of Americans for Tax Reform, says Trump’s election in November would mean good things for taxpayers’ bottom lines, even if lawmakers and a potential President Trump disagree on the exact figures.
“One thing that could derail tax reform, even if you elect Trump and a Republican House and Senate, would be [their] dramatically different [strategies for] how to get there,” Norquist said. “[But their] goals are almost identical, and compromise would be easy. Slightly higher or lower tax rates here and there, or various small details, are easy to compromise on. If he’s elected president, tax reform will happen.”
Cutting Business Taxes
Norquist says Trump’s call for reducing taxes on businesses’ income to 15 percent, and applying that tax to more kinds of businesses, is a long-needed reform.
“If you’re the business and the business is you, instead of being taxed at 44 percent, you would be taxed at 15 percent” on the part of your income that counts as business income, Norquist said. “Small business, big business, ‘Subchapter S,’ ‘C corporations, etc., will all be treated the same, which has not been done for many years.
‘Fair Share’ Comments
Norquist says promising voters to ensure “the rich will pay their fair share” is good for taxpayers, and good politics, too.
“Stating that everyone should pay their fair share does not mean that anyone has to pay more,” Norquist said. “Trump said that everybody’s rate would drop. It lets you know that he’s not playing to left-wing envy, as he gets rid of various taxes and takes all rates down.”
Yaron Brook, president and executive director of the Ayn Rand Institute, says Trump’s rhetoric about paying a “fair share” is immoral and economically illiterate.
“What’s ‘fair?'” Brook asked. “What does a ‘fair share’ mean? Morally, if you’re wealthy, you should pay less because you already created so much. It’s not economically sound, and it’s not morally sound, for the rich to pay a higher percentage of their income.”
Populism and Politicians
“My view is that anything presidential candidates say is just meaningless,” Brook said. “When they get to be president, everybody compromises, and what we get as an outcome has nothing to do with what they promised,” he said. “All the details indicate is how the candidate is positioning himself, and Trump is positioning himself as a populist, which is what he always has been.”
Brook says Trump is more likely to tinker around the edges of the tax issue, instead of fighting for real reforms.
“His inclination is to keep spending like crazy, because he has no plans for cutting government spending, and to tinker with the tax code,” Brook said. “It’s not even a dramatic change; it’s not a big change. It’s a tinkering.”
Worrying About Wrong Problem?
Brook says the country does not have a revenue problem but a spending problem.
“At the end of the day, this is what Republicans and conservatives never get: Taxes don’t matter,” Brook said. “You can tinker, as Reagan did, all you want with taxes, but if you don’t change spending habits, the money has to come from somewhere. You either raise taxes in the future, or you inflate [the currency], or you issue bonds which suck money out of the private economy, as well. How they suck money out of the private economy, whether through debt, inflation, or taxes, doesn’t really matter.”