Trump announces he would make car loan interest deductible, end double tax on foreign income

Former President Donald Trump promised Thursday he would make interest incurred on car loans fully tax deductible during his second term and would end double taxation for Americans living abroad — plans critics warn would raise prices and blow a gaping hole in the federal budget deficit.

“Today, I am also announcing that as part of our tax cuts, we will make interest on car loans fully tax deductible,” Trump told a friendly audience at the Detroit Economic Club.

“This will stimulate massive domestic auto production, and make car ownership dramatically more affordable for millions and millions of working American families,” the former president added.

Hours earlier, the 78-year-old Republican nominee released a video saying he would also put an end to double taxation.

US citizens who live abroad must still file tax returns with the Internal Revenue Service, meaning that in some cases, they have to pay US and foreign taxes on the same income — though in many cases they can claim a deduction on foreign rates.

Americans abroad who make fewer than $126,500 per year already don’t owe anything to Uncle Sam.

“Once and for all, I’m going to end double taxation on our overseas citizens,” Trump said in his video announcement.

“You’ve been wanting this for years, and nobody has listened to you, and you deserve it, and I’m going to do it,” he added. “It’s the right thing to do, and no American leader has ever been willing to stand up and commit to you the way that I have on many things, but this is a very important element for your safety, security, and, frankly, for your wallet.”

The latest tax policies add to Trump’s other proposed breaks — including to end levies on tips, Social Security and overtime payments.

In Detroit, the former president declared it was his “goal to get our country on an auto-making path” and repeated his pledge to reduce the tax rate to 15% for companies who make their products in the US.

“US-based carmakers and manufacturers will also be rewarded with expanded Research and Development tax credits,” Trump said, “where they will be able to write off 100% of the cost of heavy machinery and other equipment necessary to built a plant in the first year, and full expensing for manufacturing investments.”

Economists and free trade proponents criticized Trump’s new plans.

Scott Lincicome, vice president of economics at the libertarian Cato Institute, told The Post that while some of the Republican nominee’s proposals would be “good for growth,” others were “terrible” — and all would put the feds further in the red.

Allowing car loan interest to be tax deductible “will encourage people to take out more debt on an expensive depreciating asset by stimulating demand for cars,” Lincicome explained, adding that it “will likely increase car prices too.”

“Ultimately, this is a protectionist agenda that will launch a trade war and raise prices for Americans while killing jobs in export industries,” Brian Riedl, a senior fellow at the Manhattan Institute, told The Post. “It will also blow a hole in the budget deficit that is already rising.”

“Trump’s trying to offer corporate and individual tax cuts in exchange for higher prices, lost jobs in export industries, and soaring deficits,” Riedl added. “But Americans need a strong economy, not policy carve outs. This is big government industrial policy, and it will ultimately kill jobs and raise prices.”

Other critics argued that both Trump and Vice President Kamala Harris, who has also proposed no tax on tips and tax deductions through an expanded Child Tax Credit, are overcomplicating the tax code.

“Trump got tax reform right in 2017 by limiting — or even eliminating — credits and deductions and using these resources to drive down tax rates,” said Brandon Arnold, executive vice president of government affairs at the National Taxpayers Union. “That is the very core of what tax reform should do — clean up the tax code, make it simpler for everyday Americans to file their taxes, and provide some much-need tax relief in the process.

“Unfortunately, a close political race has led both candidates to offer up proposals that would directly undo some of the important work that was done by Reagan and Trump,” Arnold added. “Next year, we should follow the playbook of 2017 and work to simplify the tax code, lower rates and move away from targeted provisions that the candidates are proposing.”

Samuel Gregg, political economist at the American Institute for Economic Research, said, “Tax deductions are fine as far as they go, but they are no substitute for the type of tax reform that involves reducing taxes across the board for everyone as well as making the tax code smaller and simpler. More generally, the tax code should not be a way of pandering to particular interest groups who lobby politicians for preferential tax treatment.”