The tax plan from the current GOP front-runner trumps the one proposed by former Florida Gov. Jeb Bush, delivering a far more powerful shot in the arm for corporations looking to do business in the United States, financial commentator Larry Kudlow said Wednesday.
It’s simple, Kudlow said on “The Laura Ingraham Show.” While Bush would cut the current 40-percent corporate tax rate to 20 percent, Trump would do him one better, taking the rate to 15 percent. That “Jeb-plus” plan would help reverse trade imbalances with China.
“At 15 percent vs. China’s 25 on corporate tax rate, the USA has a big advantage,” he said. “And I think Trump is right that a lot of capital will flow to the United States from China and elsewhere if we get a 15 percent tax rate … I really think Trump nails that.”
Another advantage to Trump’s plan, Kudlow said, is that it grants the lower 15 percent tax rate to small businesses that file as limited liability corporations and other constructions.
Kudlow, a former budget deputy in the Reagan administration, said he agrees with Bush’s stated goal of 4 percent economic growth, even though his father and brother never achieved that rate during their presidencies. Kudlow said Bush’s plan is bolder than either his brother, who did some “decent tax cutting,” or his father, who actually raised taxes.
History shows that economic growth is tied to public policy and that taxes are a big component of that, he said. The economy grew at 5 percent for years after John F. Kennedy’s tax cut in the 1960s and at almost 5 percent for years after the Reagan tax cut. Even former President Bill Clinton, who raised income taxes, saw growth that exceeded 4 percent for most of his presidency after a cut in the capital gains tax.
“You can grow rapidly if you have the right tax policies, and the right spending policies, and the right regulatory policies,” he said. “It can be done.”
Bush’s plan phases out the mortgage interest deduction for wealthier Americans. Trump would keep the deduction but eliminate other loopholes, or phase them out at higher-income levels.
Kudlow said Trump’s plan is not perfect. Trump’s $50,000 standard deduction is “probably too high.” And Trump’s plan lacks details, which results in “loosey-goosey” calculations of its fiscal impact.
But Kramer said Trump outlines broad, pro-growth themes that should be part of any tax reform.
“What you want to look at here is the principles,” he said. “That’s all.”