In an address to the Detroit Economic Club on Thursday, former President Donald Trump floated some new tax breaks, criticized the federal response to Hurricane Helene and said that the Federal Reserve cut interest rates too much and too soon, allowing inflation to rise.
In the Motor City, Trump proposed to make interest on car loans fully deductible, saying that the move would “revolutionize” the auto industry, promote car ownership and stimulate domestic manufacturing. He compared the idea to a tax break on mortgage interest — and to the invention of the paper clip. “Somebody comes up with the paper clip and everybody says, ‘Why the hell didn’t I think of that?” Trump said, adding that his proposal “is a phenomenal thing, if I do say so myself.”
In a statement to The Wall Street Journal and a video posted to his YouTube channel, Trump also promised to end the taxation of American citizens living abroad. “Once and for all, I'm going to end double taxation on our overseas citizens,” Trump said in the video, in which he also asked for those citizens to vote for him. “You've been wanting this for years, and nobody has listened to you, and you deserve it, and I'm going to do it. It's the right thing to do, and no American leader has ever been willing to stand up and commit to you the way that I have on many things, but this is a very important element for your safety, security, and, frankly, for your wallet.”
As the Journal’s Richard Rubin and Alex Leary explain, the United States is the only major country to tax its citizens on their total income, regardless of where that money was earned or where they reside. “Essentially, an American living in Paris would have tax obligations to both France and the U.S., though the U.S. tax code already contains features meant to mitigate double taxation,” they write. They add that, while a narrow adjustment to the tax code could ease the financial burden on some Americans living abroad, including people who were born in the United States but have few ties to the country, a broader change “could open opportunities for wealthy Americans to move overseas, retain their citizenship and escape some U.S. taxes.”
Trump’s latest tax proposals follow promises for a slew of other tax breaks, including an end to the taxation of tip income, overtime pay and Social Security benefits.
In his speech Thursday, Trump also criticized the Federal Reserve for lowering its benchmark interest rate by half a percentage point, saying that inflation has started to rise (see below for context on this) and baselessly calling the move political. “The fact is that the Federal Reserve brought the interest rates down a little too quickly, it was too big a cut — and everyone knows that was a political maneuver that they tried to do before the election, but they did the wrong thing.”