Donald Trump rolls out tax breaks, but no specifics, for overseas citizens and auto buyers

[October 11, 2024]  By BILL BARROW, ADRIANA GOMEZ LICON and ISABELLA VOLMERT

DETROIT (AP) — Donald Trump on Thursday rolled out more plans for tax breaks without offering details on how they would work or how they'd affect the federal budget.

Trump vowed in a speech at the Detroit Economic Club to allow interest on car 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 to grant a key tax break to U.S. citizens living overseas to end so-called double taxation.

Trump has offered a series of tax breaks over the last several months to appeal to specific groups he's courting in the election: tipped and hourly workers, Social Security recipients, and now car buyers who have experienced sticker shock as well as Americans who live and vote abroad. In a tight race with Vice President Kamala Harris, Trump is betting that his targeted no-tax pledges will appeal to enough voters in key battlegrounds.

But so far, the Republican nominee has been vague about how those tax breaks would work or how he would pay for them — other than promising that his plans to impose sweeping tariffs would bring in new government revenue.

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

The proposal to make interest on car loans tax deductible is intended to help buyers struggling with the increase in car prices. Since inflation took off in early 2021, the average price of a new car has jumped nearly 18%, though that has fallen compared with a year ago. Used car prices are up 13%.

At the same time, the Federal Reserve’s interest rate increases, intended to combat inflation, have pushed auto-loan rates much higher. The average rate on a five-year car loan reached 8.4% in this year’s third quarter, up from 4.5% two years ago, when the Fed’s rate hikes began.

Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget, said a rough estimate of the impact of Trump’s proposals for overseas citizens and auto buyers would be to reduce tax revenues by more than $100 billion over 10 years.

If the car-loans proposal does operate like the deduction for mortgage interest, as Trump suggested, then only the one-fifth of taxpayers who itemize their deductions would be able to take advantage of it, Goldwein said.

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

Republican presidential nominee former President Donald Trump speaks at a meeting of the Detroit Economic Club, Thursday, Oct. 10, 2024, in Detroit. (AP Photo/Julia Demaree Nikhinson)

“You have to make sure that you are registered and you are going to vote, because I'm going to take very good care of you," Trump says in the video statement the overseas group's CEO, Solomon Yue, posted to his account on X.

“Once and for all, I'm going to end double taxation on our overseas citizens,” Trump said. “You've been wanting this for years, and nobody has listened to you. And you deserve it. And I'm going to do it."

The overseas tax breaks could also end up favoring some wealthy citizens, because it could open 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 been fighting for the rights of Americans abroad since its inception ten years ago,” Yue said in a statement. “We have spoken to many politicians over the years, and while they sympathized with the burden of double taxation, very few have been willing to act.”

The former president's embrace of U.S citizens living abroad comes after statements lumping those voters in with his unfounded accusations that Democrats plan to commit widespread fraud in the 2024 election.

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

He argued that efforts to make it easier for overseas citizens to vote would “dilute” the votes of military service members who Trump believes will favor him over Democratic nominee Kamala Harris.

“WATCH! Remember, IF YOU VOTE ILLEGALLY,” he threatened, “YOU’RE GOING TO JAIL.”

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

“In our business, I mean we depend on tips,” she said. “In the service industry, the nicer you are, the kinder you are, the friendlier you are, you get rewarded by tips. So I feel that we deserve it."

But Curtis Lyons, a financial adviser from Detroit who is a Democrat and was also at the Thursday event, said he believes Trump’s tax cuts in his first administration did more harm than good and only benefited the wealthier.

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

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

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