Story highlights Donald Trump presents his economic plan in Detroit

Jeffrey Miron: While the plan had a few sensible ideas, most would have disastrous effects on the American economy

Jeffrey Miron is director of economic studies at the Cato Institute and the director of undergraduate studies in the Department of Economics at Harvard University. All views expressed in this commentary are his own.

(CNN) The economic plan that Donald Trump presented on Monday in Detroit, while light on details, provides a good glimpse into what the nation can expect from a Trump presidency. Though the plan had a few noteworthy ideas, it misfired on issues ranging from tax reduction and reform to regulatory reform and trade policy.

The plan promises across-the-board tax reduction, aimed mainly at middle-class Americans. Reductions in marginal tax rates can spur economic activity, but unless the tax cuts improve the incentives to work and save, they are at best mildly beneficial in the short run and detrimental in the long run.

In particular, Trump proposes allowing parents to deduct the average cost of child care from their annual taxes. This incentivizes more children and spending -- the opposite of good reform. Policy distorts incentives when it takes a stand on the number of children or the kind of spending; it should remain neutral about these decisions.

Jeffrey Miron

Trump also called for tax simplification, such as reducing the number of existing tax brackets. This is fine as far as it goes, but in an era of H&R Block and TurboTax, it's a trivial simplification. True improvement means elimination of the code's myriad exemptions, deductions, credits and other features that favor particular types of income or activity. Trump's plan so far provides no such examples.

At the same time, Trump promises a lower tax rate on business income and full expensing of investment. This is all for the better. Lower taxation encourages businesses to locate domestically, and full expensing allows a simpler corporate tax code. The lower rate does mean a higher deficit, but by a modest amount, given the additional business activity that will occur in the United States.

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