The Wall Street Journal is reporting that GOP nominee and former president Trump is to propose a 15% corporate tax rate for companies that make products in the US. The current low tax rate is 21%. Trump will be speaking in front of the New York economic club shortly.
The proposal according to Goldman Sachs would boost the S&P earnings by about 4%. All things being equal that would increase the amount of taxes paid on those earnings, but at a lower rate. What would be the net effect to the U.S. Treasury. My guess is no one knows.
Other economic initiatives proposed in the speech include:
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New Government Efficiency Commission: Introduce a commission, suggested by Elon Musk, to conduct a financial and performance audit of the entire federal government to identify fraud, improper payments, and propose drastic reforms.
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Corporate Tax Rate Reduction: Cut the corporate tax rate to 15% for companies that manufacture products in the U.S., down from the current 21%.
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Rescind Unspent Funds: Revoke unspent funds from the Biden administration, particularly those related to the Inflation Reduction Act, which could impact various climate, healthcare, and tax policies. (Slower spending)
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Regulatory Cuts: Reaffirm a commitment to cutting regulations beyond the “two regulations eliminated for every new one” policy from his first term, including measures to lower housing costs and expedite federal land for large-scale housing construction.
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Energy Policy: Declare a national emergency to streamline approvals for new energy projects such as drilling, pipelines, refineries, and power plants, with the aim of significantly reducing energy prices.
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Support for Cryptocurrency: Advocate for a more favorable regulatory environment for cryptocurrency, aligning with the interests of the crypto industry.
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Tariffs on Imports: Propose imposing broad tariffs on imports, including higher tariffs on China, to encourage domestic manufacturing. Trump claims these tariffs would not cause inflation but rather combat it by boosting local production.
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Continuation of Trump-Era Tax Cuts: Extend the 2017 tax cuts, some of which are set to expire after 2025.
Stimulation:
- Lower taxes and continuation of tax cuts
- Regulatory cuts
- Lower energy prices
Not stimulative:
- Job losses from streamlining government agencies
- Less fiscal spending from the Inflation Reduction Act.
- Tariffs get passed on to consumers