Donald Trump gave a speech on Thursday at the Economic Club of New York where he unveiled a revised tax plan he claimed would cost $4.4 trillion over 10 years and scales back tax cuts from his original tax proposal which drew criticism for favoring the rich while adding to the national debt.
Trump claimed in his speech that we must replace globalism with “Americanism” which he described as a system requiring every policy decision to first pass a simple test: does it create more jobs and better wages for Americans?
Trump wants to set a national goal of reaching 4 percent GDP growth.
In the second quarter of 2016 U.S. GDP was 1.1 percent.
“Over the next ten years, our economic team estimates that under our plan the economy will average 3.5% growth and create a total of 25 million new jobs” Trump said.
Trump’s ambitious economic growth plan is accomplished through a complete overhaul of tax, regulatory, energy and trade policies.
Trump wants to lure back trillions in corporate wealth parked overseas and tax it at a 10 percent rate instead of 35 percent, a reduction of more than 40 percent.
“An explosion of new business and new jobs will be created. It will be amazing to watch” Trump exclaimed.
Trump’s new tax plan introduces new standard deduction levels and tax breaks among other things.
The standard deduction increases from $6,300 to $15,000 for singles, and from $12,600 to $30,000 for married couples filing jointly.
The seven tax bracket model is revised to three with rates on ordinary income of 12 percent, 25 percent, and 33 percent, higher levels from his earlier tax bracket model that called for top tax rates of 10 percent, 20 percent, and 25 percent.
The corporate income tax rate drops from 35 percent to 15 percent.
The head of household filing status is eliminated.
Itemized deductions are capped at $100,000 for single filers, or $200,000 for married couples filing jointly.
Child care costs are deductible for most Americans but the deduction isn’t available for individuals earning more than $250,000 or couples earning more than $500,000.
Last year Trump unveiled a tax plan that offered even steeper across the board tax cuts.
The non-partisan Tax Policy Center concluded that Trump’s original plan would have lowered federal revenues by $9.5 trillion over 10 years before accounting for interest or macro effects.
The Clinton campaign criticized Trump’s plan for giving tax breaks to the wealthy and big corporations, rolling back Wall Street reforms, and offering no federal minimum wage.
Under Trump’s new revised tax plan, he called for “Penny Plan” for domestic spending which has been floated by other Republicans in the past including former Republican presidential candidates Ben Carson and Senator Rand Paul (R-Kentucky) and calls for a 1 percent reduction of spending every year on non-defense and non-entitlement programs.
The Trump campaign claims that the Penny Plan will result in $ 1 trillion of savings but some economists have pointed to flaws in the plan including a focus with 1 % in annual cuts on the smallest areas of the budget while the bulk of the budget expenses in defense and entitlements gets special protection and nothing is done to address the ballooning national debt.
The non-partisan Committee For A Responsible Budget concluded in their assessment about the Penny Plan:
“Trump’s Penny Plan is a welcome proposal to offset a portion the cost of his tax plan and other proposals. It appears that the savings would fall slightly short of the $1 trillion the campaign claims but would still generate substantial budget savings. Still, implementing the proposal would be quite difficult without eliminating or dramatically scaling back several government functions, and we would encourage the Trump campaign to identify where at least some of these cuts would come from.”
“In addition, this Penny plan would only pay for a fraction of Trump’s tax plan, so significant additional savings, particularly from the fastest growing parts of the budget, will ultimately be necessary.”