President Donald Trump on Aug. 30 chose Springfield for the first of his tax plan talks, and he shed some light on his reform proposal in the 35-minute speech in the rah-rah atmosphere at Loren Cook Co.
Before a crowd of executives, laborers and media totaling 1,350 at the 2707 N. Barnes Ave. manufacturing plant, the president outlined four principles for tax reform, starting with simplifying the tax code.
“That means getting rid of the loopholes and complexity that primarily benefit the wealthiest Americans and special interests,” Trump said. “The tax code is now a massive source of complexity and frustration for tens of millions of Americans.”
Point 1: Simplified code
Trump claimed more than 90 percent of Americans consult professional help at tax time.
According to a 2014 statement by Internal Revenue Service Commissioner John Koskinen, 56 percent of individual tax returns filed each year were done by paid preparers, while 34 percent of taxpayers used tax-preparation software.
“This enormous complexity is very unfair. It disadvantages ordinary Americans who don’t have an army of accountants while benefitting deep-pocketed special interests,” Trump said, acknowledging the fact he and factory owner Jerry Cook can afford the experts who find those very loopholes.
The president said his goal is to allow people to file their taxes on an easy-to-understand, single-page form.
Rick Carr, co-owner of Superior Gearbox Co. in Stockton, said the current tax process is very cumbersome.
“The simplification would be amazing,” he said following the speech. “By the time you start your taxes in January, you hope you have them complete in April. We pay for professional accountants. The way the deductions are set up, it’s very complex. How you determine your company’s profit is so complex.”
Point 2: Corporate rate
Trump’s second stated goal is to make the American corporate tax rate more competitive among nations. He blamed the 35 percent federal rate for the export of U.S. jobs to developed countries, including China, with an average business tax rate under 24 percent.
His plan would drop the corporate tax rate to 15 percent.
“The United States is now behind France, behind Germany, behind Canada, Ireland, Japan, Mexico, South Korea and many other nations,” he said, noting he believes “made in the USA” labels are becoming more rare. “Also, with these countries and almost every country, we have massive trade deficits.”
David Carsten, a welder at Loren Cook Co.’s unionized plant, was excited by the idea of having more domestic manufacturers.
“It’s annoying every day, when I go to weld a piece of metal, and see that it’s coming from Turkey or China,” he said. “We’re putting union-made, USA-made stickers on every one of our fans that go out the door. Granted, we’re assembling them here, we’re cutting the parts, welding them together and what have you, but it’s not American steel.”
Bringing more jobs to America would force employers to compete for workers, Trump said, and drive wages up.
“We have no choice. We must lower our taxes,” he said.
But Kim Moncel, of Royal Remanufacturing in Mountain View, stood on Glenstone during the speech holding a sign that read, “The people say no more trickle down taxes.” She expressed her concern that focusing tax cuts on businesses has in the past been unsuccessfully sold to the public as a benefit to everyone.
“I didn’t get rich during the last trickle down,” she said.
“I’m still waiting for that.”
Moncel was among over 1,000 people who came out to protest Trump, personally and for his tax plan, lining both sides of Glenstone Avenue between Division and Commercial streets. Another large group gathered in support of the president near the shuttered Kmart at Glenstone and Kearney Street.
Point 3: Middle class
Although he didn’t give specifics, Trump said his third goal is to lower taxes on middle-class individuals.
He said the impetus is to spur more spending and help economic growth.
Shaun Duggins, president of Carol Jones Realtors, said the message Trump delivered was exactly what he has wanted since voting for him in 2016.
“We keep more money in their pockets, they spend more, our economy grows more, and we’re not so dependent on foreign nations,” he said.
But the president did not address what federal spending cuts might be needed to balance the budget.
“If we’re going to have a government, we need to pay for it,” said Vicky Trippe, a retired teacher, who demonstrated in front of Sonic Drive-In.
She worried large federal tax cuts could have negative consequences, similar to those in Kansas. After eliminating its corporate tax rate in 2013, Kansas state coffers are projected to be down $889 million through June 2019. Lawmakers this summer have reinstated the business tax and increased the state’s personal income tax, effective immediately.
“Businesses liked it,” she said, “but the taxes to the state went down so much that they couldn’t even pay their bills.”
Duggins remained optimistic the economy would boom if the plan were put in place.
“As Realtors, we represent the American dream,” he said inside Loren Cook Co., with patriotic music playing overhead. “It helps us all the way around, as far as people being able to have the dream of home ownership. We should see a shift in home ownership where people decide, ‘Hey I really do want to own my own.’ America’s largest equity is a home. That’s the exciting part for us.”
Superior Gearbox’s Carr said lowering taxes would bring the country closer to its liberty-based roots. Due to the structure of his business, he pays business taxes under his personal income and not the corporate tax rate.
“It’s a novel concept for Americans to be able to have control over their own money, verses the federal government taking so much control over their own money,” he said.
“That’s kind of what America was founded on.”
Point 4: Repatriation
The president’s fourth goal is to attract $3 trillion-$5 trillion in funds back to the United States that he said are currently being held in other countries with preferable tax systems.
“Because of our high tax rate and horrible, outdated, bureaucratic rules, large companies that do business overseas will often park their profits offshore to avoid paying a high United States tax if the money is brought back home,” he said. “So they leave the money over there.”
Local investor and entrepreneur Dan Cobb said the fourth point stood out to him.
“I think that’s really important,” he said, “because companies like Apple and Google have been parking billions and billions for them overseas.”
To close, Trump emphasized the idea that all Americans would benefit if the economy improved under his proposals.
That stuck a cord with Jeff Kester, director of Carol Jones Realtors’ CJR Careers.
“Business and companies are the engine that make this whole thing go,” he said. “You either own a company or you work for one. So we need companies to do well. Companies can do better if they’re sending less money to Washington, D.C. We’re all in this together. So it’s not management verses labor; it’s not labor verses the self-employed.
“When the engine is doing well, it sure helps make other parts go a lot better too.”
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The move would come with a new property tax levied on residents of regional school districts.
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