Trump proposes unspecified tax breaks for foreign citizens and car buyers

DETROIT (AP) Donald Trump outlined new tax relief plans Thursday without providing details on how they would work or their impact on the federal budget.

Trump pledged in a speech to the Detroit Economic Club to allow interest on auto loans to be deducted from taxes, saying the proposal would “stimulate massive domestic auto production” and make car ownership more affordable. In a video also released Thursday, he proposes providing a significant tax break to U.S. citizens living abroad to end so-called double taxation.

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Trump has proposed a series of tax breaks in recent months to appeal to specific groups he is courting in the election: tipped and hourly workers, Social Security recipients and now car buyers who suffered sticker shock, as did the Americans who live and vote. abroad. In a tight race with Vice President Kamala Harris, Trump is betting that his targeted no-tax promises will woo enough voters in key battlegrounds.

But so far, the Republican candidate has remained vague on how these tax breaks would work or how he would finance them, only promising that his plans to impose drastic tariffs would generate new government revenue.

Economic analyzes of his previous tax cut ideas estimated they would cost between $6 trillion and $10 trillion over 10 years, depending on which proposals become policy and how they are implemented. And mainstream economists warn that Trump's tariff plans and expected retaliation from targeted countries would raise prices for Americans, shrink the U.S. economy by more than a percentage point by 2026 and send inflation down 2 points. percentage higher next year than it would have been otherwise.

The proposal to make interest on auto loans tax deductible aims to help buyers facing rising car prices. Since inflation took off in early 2021, the average price of a new car has jumped nearly 18%, although that figure is down from a year ago. Used car prices increased by 13 percent.

At the same time, interest rate increases by the Federal Reserve, intended to combat inflation, have driven up auto loan rates significantly. The average rate on a five-year auto loan rose to 8.4% in the third quarter of this year, up from 4.5% two years ago, when the Fed's rate hikes began.

Marc Goldwein, vice chairman of the Committee for a Responsible Federal Budget, said a rough estimate of the impact of Trump's proposals on foreign citizens and auto buyers would be a reduction in tax revenue of more than $100 billion. dollars over 10 years.

If the auto loan proposal works like the mortgage interest deduction, as Trump suggested, then only a fifth of taxpayers who itemize their deductions could benefit, Goldwein said.

Trump's promise to help U.S. citizens living abroad concerns policies that may require Americans to pay taxes to the country where they reside and to the U.S. government. The United States has bilateral agreements with some countries that ease the burden in some cases. The proposal was first published by a group called Overseas Republicans.

“You need to make sure you're registered and you're going to vote, because I'm going to take very good care of you,” Trump said in the video statement posted by the foreign group's CEO, Solomon Yue, on his X account.

“Once and for all, I will end the double taxation of our foreign citizens,” Trump said. “You’ve wanted this for years and no one has listened to you. And you deserve it. And I will do it.

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Overseas tax breaks could also end up favoring some wealthy citizens, as they could open up more opportunities for them to live abroad in low-tax countries and avoid U.S. taxes.

Yue praised Trump for his commitment.

“Republicans Overseas has fought for the rights of Americans abroad since its founding ten years ago,” Yue said in a statement. “We have spoken to many politicians over the years, and although they sympathized with the burden of double taxation, very few were willing to take action. »

The former president's embrace of U.S. citizens living abroad follows statements lumping those voters in with his baseless accusations that Democrats are planning widespread fraud in the 2024 election.

“Democrats talk about how they are working so hard to get millions of votes from Americans living abroad,” Trump wrote on his Truth Social platform on September 23. “Actually, they’re getting ready to CHEAT!”

He argued that efforts to make it easier for foreign citizens to vote would “dilute” military votes that Trump said would favor him over Democratic nominee Kamala Harris.

“SHOW! Remember, IF YOU VOTE ILLEGALLY,” he threatened, “YOU WILL GO TO JAIL.”

Paulina Salzeider, 47, who attended the speech Thursday, works as a hairdresser and supports Trump's tax cuts and his plan to exclude tips from federal taxes.

“In our business, I mean, we rely on tips,” she said. “In the service industry, the nicer you are, the kinder you are, the friendlier you are, you are rewarded with tips. So I think we deserve it.

But Curtis Lyons, a Democratic financial adviser from Detroit who was also at Thursday's event, said he believes Trump's tax cuts during his first administration have done more harm than good and had only benefited the richest.

“I’m not going to vote for our guest,” he said. “I’m just here to see and be entertained.”

Barrow reported from Atlanta and Gomez Licon reported from Fort Lauderdale, Florida. Associated Press writer Christopher Rugaber contributed to this report from Washington.

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