Trump proposes eliminating "double taxation" of Americans abroad

Donald Trump summed up a new tax promise: to eliminate "double taxation" of Americans abroad. The former president made the claim exclusively to The Wall Street Journal (WSJ), adding a new pillar to his economic agenda, which includes removing regulations, lowering taxes and boosting the "manufacturing renaissance."

"I support ending double taxation of Americans overseas," Trump told the WSJ, though he did not offer many more details. The former president already implemented something similar as part of the Tax Cuts and Job Creation Act of 2017.

"The first provision is what is called a 'participation exemption', which exempts foreign profits paid back to the United States from domestic taxation. This is what moved the U.S. system from a 'worldwide' tax system closer to a 'territorial' tax system," explained the Tax Foundation about the aforementioned legislation enacted by Trump.

As explained in the WSJ, the United States taxes citizens on their total income, regardless of where they live. In fact, it is the only "major country that has such a rule."

For example, if a U.S. citizen lives in Argentina, they have tax obligations both with in their country of residence and in the United States. However, an Argentinean living in the United States would not owe any taxes to Argentina.

This tax rule dates back to 1864, when the income tax was created to finance the Civil War.

Solomon Yue, executive director of Republicans Overseas, a U.S. citizens' rights advocacy group, told the WSJ that Trump's new proposal is a "giant first step."

Trump's economic plan

The Republican candidate laid out his economic agenda at a recent campaign event in Savannah, Georgia.

By way of a response to his critics, particularly on the impact of tariffs on prices, he asserted that the centerpiece of his economic plan would be a tax cut for companies basing their manufacturing operations in the United States.

"The centerpiece of my plan for a manufacturing renaissance will be a 15% Made in America Tax Rate, cutting the business tax from 21% to 15%, but only for those who make their product in the USA," the Republican explained.

"We will set up special zones on federal land with ultra-low taxes and regulations for American producers. These will be ideal spots for relocating entire industries that we have taken in from other countries," Trump added.

The idea is similar to his Opportunity Zones policy, which offered attractive tax incentives to companies that set up shop in specific communities, creating jobs in what Trump described as the "forgotten places" of the country.

At the same time, Trump spoke of a 100% tariff on automobiles crossing the border with Mexico. However, he said that producers will be able to get rid of the tariff if they build a plant in the United States.

"It’ll be like it was 50 years ago, and these jobs will become roaring back, and they’re going to — we’re going to be making autos at a level that before we’ll be making cars bigger, better, more beautiful, stronger and faster than ever before. Billions of people around the globe will soon be buying products proudly stamped, ‘Made in the USA'," he said.