Trump vows to ‘bring back Main Street’ by cutting business tax to 15%
Donald Trump has vowed to cut the US business tax rate to 15%, in a speech otherwise short on specifics, but heavy on “America first” rhetoric.
Addressing workers in Springfield, Missouri, the US president – who is yet to release his own tax returns – sought to take up the mantle of Ronald Reagan, the last president to oversee a major tax reduction, even though he has sharply criticised Reagan’s measures in the past.
Trump claimed that America has gone from a tax rate lower than its economic competitors to one that is more than 60% higher. “When it comes to the business tax, we are dead last: can you believe that?” he said. “So this cannot be allowed to continue any longer. America must lead the way, not follow from behind.”
Emphasising a theme of restoring lost glory, the president continued: “We have totally surrendered our competitive edge to other countries. We’re not surrendering any more. Ideally, and I say this for our secretary of the treasury, we would like to bring our business tax rate down to 15%, which would make our tax rate lower than most countries but still by no means the lowest, unfortunately, in the world. But it would make us highly competitive.”
Treasury secretary Steven Mnuchin, who was present, is one of the main architects of the tax reform but Trump’s figure seems to be a stretch. Some members of Congress have already said any plan would be likely to cut business taxes to no lower than 20%, while experts say 25% is more likely.
Reagan pulled off tax reform in 1986 but only after two years of haggling and developing relationships with House speaker Thomas “Tip” O’Neill and other Democrats to achieve bipartisan support. He was also in the sixth year of his presidency, had fewer distractions than Trump and was more reluctant to add to the government deficit.
Trump, who has shown little interest in reaching across the aisle, said: “In 1986, Ronald Reagan led the world by cutting our corporate tax rate to 34%. That was below the average rate for developed countries at the time. Everybody thought that was a monumental thing that happened. But then, under this pro-America system, our economy boomed. It just went beautifully, right through the roof. The middle class thrived and median family increased.”
Other countries emulated America’s success, he argued, and cut their taxes to become more competitive. “They are taking us, frankly, to the cleaners. So we must, we have no choice, we must lower our taxes.”
Instead of a Reaganesque olive branch, he then issued a threat to a Democratic Senator in her home state. “Your senator, Claire McCaskill, she must do this for you. If she doesn’t do it for you, you have to vote her out of office.”
The crowd cheered and whistled. Trump added: “She’s going to make that commitment. We just can’t do this anymore with the obstruction and the obstructionists. The Dems are looking to obstruct tax cuts and tax reform.”
But Trump was not always so enthusiastic. Writing in the Wall Street Journal in 1999, he described Reagan’s Tax Reform Act of 1986 as “one of the worst ideas in recent history”.
Trump set out four priorities: simplifying the tax code and closing loopholes exploited by the wealthy and special interests (“I’m speaking against myself when I do this”); a lower tax rate that will give Americans a pay rise and the business tax reduction to make the US competitive; tax relief for middle income families, “the forgotten people”; and bringing back trillions of dollars that US companies currently park off shore.
Trump is striving to recover from a humiliating defeat in his attempt to repeal and replace Barack Obama’s healthcare law. Whereas he made no major public speech during that process and blamed Congress for the failure, Wednesday’s event at a manufacturing company is expected to be the first aiming to drum up support.
“This is our once-in-a-lifetime opportunity,” he said. “I am fully committed to working with Congress to get this job done and I don’t want to be disappointed by Congress.”
His voice rose and his hand sliced the air then pointing to the audience, which included several members of Congress. “Do you understand me? You understand? Understand.”
The crowd cheered and applauded. Trump, shaking his head a little wearily, hands gripping the lectern, added: “Congress. I think Congress is going to make a comeback. I hope so.” There was some laughter. “I tell you what: the United States is counting on it.”
The audience included his daughter and adviser Ivanka Trump. “I see my beautiful daughter’s in the audience,” the president said. “Stand up. She working very hard. I’m very proud of Ivanka.”
In a hard-edged speech that characteristically pushed US self-interest, Trump declared that his reforms would would “bring back Main Street by reducing the crushing tax burden” and spur economic growth to benefit both companies and workers.
Appealing to “every member” of Congress to get on board, Trump added: “Instead of exporting our jobs, we will export our goods. Our jobs will both stay here in America and come back to America. We will have it both ways. Millions of struggling Americans will be lifted from welfare to work… I want Americans to wake up happy to go to work for a big fat beautiful pay cheque… I want them to be proud again.”
But Democrats condemned what they see as an attempt to benefit corporations and the top 1%. Nancy Pelosi, minority leader in the House, said: “Instead of offering the American people a plan for real, job-creating tax reform, President Trump is pushing a billionaires-first, trickle-down tax scheme that hands out massive tax cuts to the wealthiest, at the expense of American families.
“If Republicans have their way, they will blow a huge hole in the deficit, gut Medicare, Medicaid, social security and the Affordable Care Act – all just to fund deficit-busting tax breaks for the high-end.”