Our current tax code actually discourages business growth and penalizes success. Too many companies, from our biggest brands to innovative start-ups, are moving their headquarters out of the country, either directly or through corporate inversions. In an inversion a company moves its legal headquarters to a lower-tax nation and pays taxes there. It isn’t illegal or dishonest or even unpatriotic, it’s just good business. Any business that does not take advantage of the opportunity to increase revenue by lowering its taxes isn’t being properly managed. The Democrats want to make inversions illegal, but that isn’t going to work. Whatever laws they pass, with literally billions of dollars at stake, corporations will find methods to get around them. It makes a lot more sense to create an environment that welcomes business.
Under Ronald Reagan we had the best corporate tax rate in the industrialized world. Now we’ve got the worst. Rather than working with our corporations to rebuild our economy and create millions of jobs, we’re practically forcing them to relocate. This tax plan would cut the corporate tax rate to 15 percent—for our small businesses and freelancers as well as the big corporations. Small businesses are the true engine of our economy. According to the Council of Economic Advisors, American small businesses create 60 percent of our new jobs. But when tax credits and deductions are included, most small businesses are actually taxed at a higher rate than large corporations. Under existing tax law, sole proprietors, freelancers, unincorporated small businesses, and pass-through entities are taxed at the higher personal income tax rates. In reality, they are often taxed at twice the rate corporations actually pay. With the Internet changing the structure of the business world and encouraging start-ups, there are more of these than ever before. This is where our economic future is being built, where every dollar counts, and our tax code makes it tough for them to survive.
As long as these businesses are unfairly taxed at personal income rates, they will be at a huge disadvantage. The right plan would create a new 15 percent business tax rate within the personal income tax code that would substantially reduce taxes and help these businesses succeed and grow.
As you read this, American-owned corporations have as much as $2.5 trillion in cash sitting overseas. Just imagine what would happen if our corporations brought that money home. How many jobs would be created? Currently, they don’t bring it home because the tax rate here is much higher than they are paying in other countries. A key component of this plan is a onetime repatriation of corporate cash now held overseas at a 10 percent tax rate. Under this plan, corporations would profit tremendously by bringing home that $2.5 trillion and putting it to work—while benefitting from the globally competitive, newly lowered corporate rate.
The big question everybody will ask is, How do you pay for this wonderful plan? The good news is that it is revenue neutral—and that’s before the economic growth that will be triggered by putting more money in your pocket and by the new jobs that will be created. This plan will be paid for by reducing or eliminating most of the deductions and loopholes that allow the very rich to pay lower taxes, by the repatriation of corporate cash held overseas, by putting an end to allowing corporations to defer taxes on income earned outside this country, and by cutting down or eliminating those corporate loopholes catering to special interests—in addition to those deductions that are made redundant or unnecessary by lowering the tax rate on corporations and business income. A reasonable rate of the deductibility of business interest expenses will also be phased in.
We also must finally reduce waste. Billions and billions of dollars are wasted annually, and nobody seems accountable. All politicians in every election cycle promise to reduce waste in spending. When was the last time you heard of government actually doing that? I’ll answer that: Never. In business you learn that small savings very quickly become large savings. When you’re spending your own money, you learn how to eliminate waste. The next president has to stop throwing your money away. Save a few billion here, a few billion there, and before you know it, you’ve made a real dent in spending.
This waste isn’t difficult to find. In 2013, Business Insider’s Walter Hickey went through the reports of each government agency’s Inspector General and pretty easily identified $15 billion in quick savings, ranging from the $42 million given to a college by the Department of Education—that was ineligible to receive any federal funds, to the $2.7 billion that the Department of Health and Human Services could save just by reexamining the price that Medicaid and Medicare should pay for wholesale prescription drugs.
In 2015, the Citizens Against Government Waste issued its Prime Cuts report, showing how $648 billion could be cut from the 2016 budget without causing harm. $9.6 billion could be saved by ending the Rural Utilities Service program that makes loans and grants to utilities in underserved parts of the country—in one rural Arkansas town the government spent $5,500 per resident of your tax dollars to provide broadband access. It also points out the cost of a lack of supervision of different programs, noting that there are 6.5 million active social security accounts issued to people that supposedly are 112 years old or older—although there were only 35 known people of that age. And a lot of people have estimated that there is more than $100 billion in waste in the Medicare program.
The point is that we throw away billions of dollars every single year, and the next president has to finally do something to stop it.
It’s time we finally brought our tax system up to date by reducing the burden on most Americans, simplifying the system for everyone, providing a sensible policy for large corporations and small businesses, and cutting out the billions of your dollars we waste every year… and then, to top it all off, bring our jobs back home where they belong.
17
MAKING AMERICA GREAT AGAIN
I WAS TWENTY-EIGHT YEARS old in 1974 when I got involved with my first major construction project. The once great Commodore Hotel, located right next to Grand Central Station, was a total mess. There had been a time when the Commodore was one of the greatest hotels in the world, but the hotel and the whole neighborhood had become run-down.
A lot of the buildings in the area were already in foreclosure, and many of the stores were boarded up. The exterior of the Commodore was filthy, and the inside was so dark and dingy that it felt like the building was on the verge of becoming a welfare hotel.
It was a dying building, in a dying neighborhood, in a struggling city.
I probably was still too young to know better. But you know what—I was the same person then that I am today, up for any challenge. I had total confidence in my ability to get great things done. But today I have the added benefit of truly great experience.
When I looked at the Commodore, I saw its potential—it would be the largest hotel renovation in New York City during the latter part of the twentieth century.
The neighborhood still had possibilities as well. Right in the heart of the Grand Central area, there were thousands of people walking by the hotel every day. I didn’t have enough money to finance the deal myself, and I might not have risked it even if I had the money to do so.
All kinds of very smart real estate investors told me it wouldn’t work.
And yet I had a vision of what could be done, so I never gave up. My enthusiasm and meticulous planning brought others to the table. I’m an unstoppable force when I’m excited, and I was in full Trump mode on this project—and many others since then.
During the years it took me to put this deal together, I learned a lot about working with the city and the banks, the construction industry and the unions. I could have just refurbished the existing structure, but that’s not the way I think.