Trump Panders to Auto Industry, Proposes Making Car Loan Interest Tax Deductible
As we enter the final days of the 2024 election cycle, the presidential campaigns are making their final pitches to voters. Former president Donald Trump’s latest tax proposal sounds like good politics, but it also suggests no deeper economic message than wanting to get elected.
“We will make interest on car loans fully deductible,” Trump said in a speech to the Detroit Economic Club on Thursday. “This will stimulate massive domestic auto production and make car ownership dramatically more affordable for millions and millions of working American families.”
According to CNBC’s Elizabeth Gravier, the average new car owner can expect to pay around $4,450 in loan interest over six years, while the average used car will cost its owner about $5,833 in loan interest over five years.
But tax filers would likely have to itemize their deductions—and 90 percent of taxpayers simply take the standard deduction instead of itemizing. For tax year 2024, the standard deduction is $29,200 for married couples and $14,600 for individuals, meaning any taxpayer who hopes to take advantage of Trump’s proposed car loan interest break would necessarily have a significant amount of other deductions, like mortgage interest and real estate property taxes.
So while making car loans tax deductible makes little sense as economic policy, it makes perfect sense when you consider the audience: Detroit, home of America’s auto industry. (After making the announcement, Trump even asked the crowd, “Who likes that idea?”, as if to make sure it landed.)
Auto dealership owners also make up a significant segment of the Republican base: “Auto dealers are one of the five most common professions among the top 0.1 percent of American earners,” wrote Slate‘s Alexander Sammon in 2023. “They’re also one of the most organized political factions…and donate to Republicans at a rate of 6-to-1.”
The car loan proposal is the latest in a series of seemingly random tax proposals the former president has floated in recent months. Taken as a whole, it appears that Trump’s economic policy is largely based on pandering to whichever crowd he’s in front of.
“For those hotel workers people that get tips, you’re gonna be very happy, because when I get to office, we are going to not charge taxes on tips,” Trump told a crowd in Nevada all the way back in June. The Associated Press noted that “Nevada has the highest concentration of tipped workers in the country, with about 25.8 waiters and waitresses per 1,000 jobs.” The proposal soon became Republican orthodoxy, included in the party platform and in legislation proposed by Republicans in the Senate.
In an all-caps post on Truth Social in July, Trump declared that “Seniors should not pay tax on Social Security!” At a Tucson
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