Former President Donald Trump on Thursday pledged to make interest on car loans fully tax deductible and end double taxation for Americans living abroad during his second term. Critics have warned that the plan would raise prices and leave a big hole in the federal budget deficit.
“Today, as part of the tax cuts, I'm also announcing that auto loan interest will be fully tax deductible,” President Trump told a friendly audience at the Detroit Economic Club.
“This will massively stimulate domestic auto production and dramatically make car ownership more affordable for millions of American working families,” the former president added.
Hours earlier, the 78-year-old Republican candidate released a video saying he would also end double taxation.
U.S. citizens living abroad must continue to file tax returns with the Internal Revenue Service. This means that in some cases, you may have to pay U.S. and foreign taxes on the same income. However, in many cases you can claim a deduction at foreign tax rates.
The IRS only enforces it on U.S. citizens who live and earn income overseas. Over $126,500 It is taxed annually.
“We will once and for all abolish double taxation on foreign nationals,” President Trump said in a video announcement.
“You've wanted this for years and no one listened to you. You deserve it. I'm going to do it,” he added. “It's the right thing to do, and no American leader has ever been willing to stand up and be as committed to you as I am on so many things. But this is about your safety, your security, and frankly… Your wallet is a very important element for national security. ”
The latest tax policy is in addition to other measures proposed by President Trump, including eliminating taxes on tips, Social Security and overtime pay.
In Detroit, the former president declared his “goal is to put our country on the road to auto manufacturing” and reiterated his pledge to lower the tax rate to 15% for companies that make products in the United States.
“U.S.-based automakers and manufacturers will also receive expanded research and development tax credits,” President Trump said, adding, “U.S. “We will be able to depreciate it by 30%,” he said. In the first year, the manufacturing investment is fully covered. ”
Economists and free trade advocates criticized President Trump's new plan.
Scott Linthicum, vice president of economics at the liberal Cato Institute, told the Post that some of the Republican candidates' proposals are “good for growth,” while others are “terrible,” and none of them are. He said it would push the Fed deeper into the red.
Making interest on car loans tax deductible would “stimulate demand for cars and encourage people to borrow more on expensive depreciating assets,” Linthicome said. “Car prices are also likely to rise,” he added.
“Ultimately, this is a protectionist policy that starts a trade war and raises prices for Americans while killing jobs in export industries,” Brian Riedl, a senior fellow at the Manhattan Institute, told the Post. told. “It will also create a hole in the already rising budget deficit.”
“President Trump is proposing corporate and personal tax cuts in exchange for higher prices, job losses in export industries, and skyrocketing deficits,” Riedl added. “But what Americans need is not policy, but a strong economy. This is a big government industrial policy that will ultimately kill jobs and drive up prices. .”
Other critics argued that both President Trump and Vice President Kamala Harris' proposals for tax exemptions for tips and tax credits by expanding the child tax credit overcomplicate the tax code.
“Trump successfully implemented tax reform in 2017 by limiting or eliminating deductions and deductions and using those resources to lower tax rates,” said Brandon Arnold, executive vice president of government affairs for the National Taxpayers Union. I did,” he said. “That's the core of what tax reform is supposed to do: clean up the tax code, make it easier for ordinary Americans to pay their taxes, and provide some much-needed tax breaks in the process.”
“Unfortunately, the close race resulted in both candidates making proposals that directly undo some of the important work done by Reagan and Trump,” Arnold added. “Next year, we should follow our 2017 strategy and work to simplify our tax code, lower rates, and move away from the targeted provisions that candidates are proposing.”
Samuel Gregg, a political economist at the American Institute for Economic Research, said, “Tax credits are fine in and of themselves, but they are not a substitute for the type of tax reform that cuts taxes across the board and reduces tax liability for everyone.'' No,” he said. Your tax code will be smaller and simpler. More generally, tax laws should not pander to special interests that seek tax benefits from politicians. ”
