Former President Donald Trump just revealed new details about his economic plan for the United States if he is elected president in the next election. His stated goal: revitalize the country’s manufacturing capacity and boost economic growth.
Trump addressed a group of business leaders and economists during a speech delivered to The Economic Club of New York on Thursday. He primarily focused on promising massive tax cuts for US-based manufacturers and measures to stimulate domestic production and job creation.
At the heart of his proposal and strategy lies the intention to slash the corporate tax rate from 21% to 15% for companies with manufacturing operations in America. He claims this would incentivize American businesses to ramp up production locally and motivate companies overseas to move their operations to the country.
“My message is simple: Make your product here in America and only in America,” Trump declared during his speech. “We are not going to be taken advantage of anymore.”
These promises would result in a significant shift compared to the current administration’s views on corporate taxes and are effectively distancing Trump from the proposals made by his Democratic contender, Kamala Harris, who has repeatedly advocated for tax increases on corporations (and tax cuts for regular Americans) to put more money back in the pockets of America’s working class.
Trump Plans to Bring Elon Musk on Board to Make the Government More Efficient
This corporate tax rate cut is the centerpiece of Trump’s master plan to “Make America Great Again.”
However, he also made another shocking announcement that rapidly captured the headlines. Trump intends to create a Government Efficiency Commission that would be led by no other than the head of Tesla (TSLA) and Chief Twit, Elon Musk.
“I will create a government efficiency commission tasked with conducting a complete financial and performance audit of the entire federal government,” Trump stated. The commission would be charged with developing a plan to eliminate “fraud and improper payments” within six months of its formation.
Critics immediately called out the plan, calling it corrupt and generally insane. It’s important to remember that Elon Musk promised to donate $45 million to a pro-Trump PAC to help him get elected less than 2 months ago. Even if Musk hadn’t donated tens of millions of dollars to Trump PACs, he has colossal conflicts of interest as his companies directly contract with the government.
Another key part of Trump’s economic plan is a strong focus on energy policy. He pledged to “end Kamala Harris’ anti-energy crusade and implement a policy of energy abundance, energy independence and even energy dominance.” The former president claimed that his plan “will cut energy prices in half or more than that within 12 months of taking office.”
To achieve this, Trump said he would “immediately issue a national emergency declaration to achieve a massive increase in domestic energy supply.” He also vowed to rescind all unspent funds under the Biden-Harris administration’s Inflation Reduction Act, which he referred to as “misnamed.”
Moreover, in an effort to address rising housing costs, Trump proposed opening up federal land for homebuilding. These new housing zones would be “low-tax” and “low-regulation.” The specific details of this project were not provided, and he proposed no legislation to deal with the rampant exercise of monopoly power in the housing market, which continues to push prices higher.
Trump also called for the creation of a sovereign wealth fund, in part to fund major infrastructure projects.
Experts Have Mixed Views About “Trumponomics”
Trump’s economic proposals, particularly the corporate tax cut, have immediately prompted economists and analysts to raise questions and make arguments on the merits and odds of implementing these measures.
Trump’s supporters argue that lower corporate taxes will result in additional job positions added to the economy and wage growth.
John Paulson, a billionaire hedge-fund manager and Trump fundraiser, stated, “I think if you combine tariffs to make it more attractive for manufacturers to build in America versus abroad, and combine that with a modest tax incentive, I think that will bring more manufacturing back to the US and have a positive impact on jobs and wages.”
Also read: Kamala Harris Proposes Federal Ban on Grocery Price Gouging: Would It Work?
Others like Rebecca Kysar, a tax-law expert from Fordham School of Law commented that Trump needs to determine an exact definition for what a manufacturing company is to avoid fraudulent situations where businesses that do not qualify for these incentives end up taking advantage of the scheme and pay less taxes than they should.
Stephen Brown, deputy chief North America economist for Capital Economics, highlighted the potential administrative burden of requiring companies to prove where their underlying components come from. This could be particularly challenging for manufacturers of complex equipment and small companies.
The key beneficiaries could be companies making either simple products or products that would be unlikely to be imported in the first place,” he added.
Others have pointed out that Trump’s aggressive plan to increase tariffs would result in another spike in the country’s inflation rate, which has currently eased from 9.1% in 2022 to 2.9% as of August this year on an annualized basis. Economists rarely all agree about anything but essentially all of them admit that tariffs raise prices.
Trump and Harris Economic Proposals Stand in Stark Contrast
On the other side of the aisle, Kamala Harris is supporting some proposals that fully antagonize what Trump is currently promoting and endorsing. First, when it comes to tax cuts, she wants to raise the corporate tax rate to 28%, not lower it.
She also believes that the government must pressure billionaires and big corporations to “pay their fair share” of taxes and provide much-needed resources to the government to support working families.
Also read: What A Kamala Harris Presidency Might Mean for US Stocks and Businesses
Meanwhile, on the subject of energy, Harris claims that fossil fuel production needs to be progressively lowered and fully supports the creation and development of alternative sources of clean energy and strategies that address climate change. Trump, on the other hand, calls climate change a “hoax” and refuses to acknowledge the extensive body of evidence proving the phenomenon.
Harris has supported the Inflation Reduction Act, which includes significant investments in renewable energy and climate initiatives.
Finally, she prefers to offer first-time home buyers tax credits rather than giving construction companies free passes to build on federal land. This is a great example that shows how each candidate formulates their economic policies.
Harris has announced simple ways to directly help Americans afford their constantly rising costs of living like the child tax credit, first-time homeowner tax credit, and a ban on price gouging. Conversely, Trump makes promises to help large businesses first, implying that those businesses doing well will somehow help everyday Americans (essentially modern day “Trickle-down economics”).
Everyone Would Love More Specifics on Trump’s Plans
To the surprise of absolutely no one, most members of the business community have supported Trump’s proposals. Lisa Winton, the head of Winton Machine, a company that helps factories build automated manufacturing processes highlighted that even though she is in favor of persuading companies to manufacture their products in the US, she is still eager to hear the specifics of these policies.
Meanwhile, others have voiced concerns about the complexity of implementing these policies. Kip Eideberg, Senior VP for the Association of Equipment Manufacturers, noted that companies are still looking for clarity on Trump’s proposal and are not entirely sure of who would qualify for these tax cuts. Furthermore, the vague nature of the proposal could make it easy for noncompliant companies to cheat the government.
Also read: Trump & Harris Propose “No Taxes on Tips”
In the political arena, Trump’s economic vision sets up a clear ideological battle with Harris and the Democratic Party. While Trump emphasizes deregulation, tax cuts, and “America First” policies, Harris focuses on increasing corporate taxes, expanding social programs, and addressing income inequality.
Economists and policy analysts have offered different assessments of Trump’s proposals. While some see their potential to create jobs and fuel economic growth, others warn of potential negative consequences, including increased deficit spending and the risk of creating trade conflicts.
As the election approaches, both Trump and Harris will keep refining and promoting their economic agendas, setting the stage for a robust debate on the future direction of the American economy. Voters will be faced with a clear choice between two markedly different approaches to taxation, regulation, and economic growth.