Editor’s Note: Today’s post is Part 1 of a two part series examining how the U.S. presidential race could affect Silicon Valley innovation, an ecosystem that’s affected by the United States’ international relations, immigration policy, and other political factors.

We have attempted to stay away from political preferences and present findings as publicly reported by the candidates themselves.

Part 2 will look at how a Clinton presidency could affect Silicon Valley, and will be published next week.

[Update, 8/14/16: Malcolm McGough, the Trump campaign’s California political director, contacted us after this was posted and confirmed that we stated the candidate’s views on these issues accurately.]

With 87 days left until the 2016 presidential election, we’re taking a look at how the candidates’ policies might impact innovation and the tech industry. In Part 1 today, we take a look at the potential impacts a Trump presidency could have on Silicon Valley.

(Full disclosure: I left a message with the Trump campaign’s San Francisco office, but they did not respond.)

1. Condense Tax Brackets, Raise Taxes On Carried Interest, Repatriate Overseas Tech Wealth

Donald Trump has called for sweeping changes to the tax code, starting with the elimination of federal income taxes on individuals who make less than $25K and couples who make under $50K. Additionally, he’s proposed condensing the existing seven tax brackets into three.

First-bracket earners would pay 12%, middle-bracket workers would pay 25%, and those at the top would pay 33%, instead of today’s 39.6%, said Trump, who also wants to raise the tax rate on carried interest — net capital gains passed through to a fund’s general partner and investment managers.

Today, carried interest is taxed at 23.8%: of that, 3.8% is an investment tax, and 20% is for net capital gains. Under the Trump plan, carried interest would be taxed at 33%, which would reduce earnings for VCs and portfolio managers.

In an August 8 address to the Detroit Economic Club, Trump described the Carried Interest Deduction as one of several “special interest loopholes that have been so good for Wall Street investors, and people like me, but unfair to American workers.”

The New York-based real estate magnate said he would lower the top tax rate for business income from 35% at 15% and would also encourage US corporations to repatriate “trillions” of dollars kept in offshore banks. “Our plan will bring that cash home, applying a 10 percent tax,” said Trump.

An estimate by Moody’s Investor Service said $504 billion of the $1.7 trillion in overseas cash US firms held in 2015 was in the accounts of five tech companies: Apple, Cisco, Microsoft, Oracle and Alphabet. If a President Trump could convince these titans to bring those dollars home, the funds could be used for stock buybacks, increased dividends, R&D, distro, and much more.

2. Proposed Immigration Rule Could Ban Startup Founders From US

Although he initially called for an immediate halt to all immigration from countries with majority Muslim populations, Trump has since broadened his stance. This week, GOP Vice Presidential candidate Gov. Mike Pence said he and Trump now want “a temporary suspension of immigration from countries or territories compromised by terrorism.”

Without a specific list of nations, it’s hard to predict how this might affect the US tech community, which has generally welcomed talent, regardless of one’s country of origin. It’s also unclear whether countries that have experienced terror attacks — such as the UK, France, Belgium, and Israel –would be impacted by this proposed policy.

I use both iPhone & Samsung. If Apple doesn’t give info to authorities on the terrorists I’ll only be using Samsung until they give info.

— Donald J. Trump (@realDonaldTrump) February 19, 2016

3. Is Trump Anti-encryption?

It’s unclear whether Trump is opposed to tech firms offering encrypted products, but when Apple refused to help the FBI access an iPhone used by the perpetrators of the San Bernadino terror attack, Trump called for a boycott.

However, CNET revealed that Trump still holds between $1.1 and $2.25 million in Apple stock. Because the candidate hasn’t mentioned the issue since first raising it in May, it’s hard to determine exactly where he stands on encryption standards.

4. Tougher Stance on IP protection in China

According to Trump’s Detroit speech, “improved protection of America’s intellectual property in China would produce more than 2 million more jobs right here in the United States.”

Politico reports that Trump’s stats are from a 2011 International Trade Commission report that estimated 2.1 million new jobs and up to $107 billion in increased sales if China stepped up IP enforcement, but economists aren’t able to quantify the “specific impact of such a policy change.”

How do you take care of our people if you don’t make anything? We don’t make anything. We are rapidly losing our manufacturing to China etc.

— Donald J. Trump (@realDonaldTrump) April 25, 2015

5. Make Tech Manufacturing Great Again

“We’re going to get Apple to build their damn computers in this country instead of other countries.”

In a January speech at Liberty University, Trump ended with a pledge:

“We’re going to get Apple to build their damn computers in this country instead of other countries.”

On several occasions, Trump has criticized firms like Ford and Carrier for shuttering US plants and reopening them in Mexico to lower labor costs. So far, his campaign has not provided a detailed proposal for attracting a large base of high-tech manufacturing jobs that can accommodate global demand for consumer tech.

Tech manufacturers tend to rely on lean supply chains to keep labor costs low and maximize profits, so it’s hard to imagine what incentive they’d have to stop ordering from China, where workers who assemble iPhones earn about $750/month with overtime, according to China Labor Watch.

Since launching his campaign, Donald Trump has continued to workshop policies after they’ve been announced, so it’s not entirely clear which of these ideas he’d attempt to codify. Legislators on both sides of the aisle have long resisted calls to boost capital gains rates, and when the state of Kansas exempted pass-through income from taxation, it blew a hole in the state’s budget. The candidate hasn’t shared details for his manufacturing plan, and many experts agree that his proposed immigration policies “defy the logic of science, engineering and law.”

While it’s impossible to know exactly how a Trump presidency would affect Silicon Valley, or the nation at large, we believe it’s important to look closely at self-reported pledges from each candidate to understand their impact on innovation, founders, and the investment ecosystem.

Stay tuned next week for Part 2: How would a Clinton presidency affect Silicon Valley?

immigration

How Might A Trump Presidency Impact Silicon Valley?