<div id="readability-page-1"><div> By Adam Michel Trump is not just putting the White House at the center of U.S. business. He's also inventing novel ways to tax corporate America, consumers and employees. President Donald Trump greets Nvidia CEO Jensen Huang at the White House in April. Trump's &#34;state-directed capitalism&#34; involves deals with Nvidia and other U.S. tech companies. The president's fixation on novel revenue sources is bad economics, bad tax policy, legally dubious, and won't make a dent in the federal budget deficit. The buzz in Washington is that America is marching toward state-directed capitalism. President Donald Trump's recent deals with Nvidia (NVDA) and Intel (INTC) are prime examples: The government picks corporate winners and dictates market terms. This corporatism is a worrying trend. But most commentary misses a peculiar and revealing twist: Each of Trump's deals requires hefty payments to the U.S. Treasury. Trump is not just putting the White House at the center of U.S. business. He's also inventing novel ways to tax corporate America, its consumers and employees. This speaks to a deeper problem: the president's fixation on novel revenue sources. It's bad economics, bad tax policy, legally dubious, and won't make a meaningful dent in the federal budget deficit. The conventional critique of these industrial deals is straightforward. When the government makes multibillion-dollar arrangements with chipmakers or foreign steel giants, it crowds out market discipline and turns competition into political patronage. Market entrepreneurs reorient their innovations toward securing and maintaining political access rather than innovating products designed to meet consumer needs. Trump is creating quirky, made-for-headlines revenue sources that he can claim are paid by someone other than his constituents. But what stands out in the reported arrangements with Nvidia, Advanced Micro Devices (AMD), Nippon Steel (JP:5401) (NPSCY), and Intel is not just the industrial policy. It's the payments demanded by the U.S. Treasury. They aren't the normal direct subsidies, loan guarantees or tax credits. They are bespoke payments with murky terms. It's a pattern. Trump has floated similar novel revenue streams before: new fees based on patent value, one-off levies tied to immigration, and, most notably, tariffs as a substitute for the income tax. The federal government doesn't lack ways to raise revenue. Washington already extracts more than 17% of GDP in a typical year. What Trump is chasing is novelty: creating quirky, made-for-headlines revenue sources that he can claim are paid by someone other than his constituents. Sound tax systems require neutrality, inflicting as little distortion on economic decision-making as possible. Trump's improvised taxes do the opposite. But novelty isn't a virtue in tax policy. Sound tax systems require neutrality, inflicting as little distortion on economic decision-making as possible. Trump's improvised taxes do the opposite. The recent industrial deals illustrate the risks of novelty. When a president can dictate that leading American firms must pay the Treasury a couple of billion dollars in exchange for merger approval, market access, or other regulatory relief, tax policy becomes indistinguishable from extortion. Investors no longer ask, &#34;Where will my investment earn the highest return?&#34; They ask, &#34;What cut will Washington demand, and how do I stay in its good graces?&#34; That's not capitalism. It's corporatism with a surtax. Read: Lutnick hints at taking stakes in defense companies. What it means for Northrop and other stocks. The bevy of deals for revenue sharing, government equity stakes, and nebulous &#34;golden shares&#34; might raise a few billion dollars a year. Compare that to the roughly $7 trillion the government spends each year and the $3 trillion annual deficit we are projected to have by 2032, if Congress continues on its current policy path. Trump's biggest new revenue source is from tariffs, which the administration has championed as raising $150 billion in the past six months. But headline figures can overstate revenue gains that don't take into account accompanying reductions in other revenue sources and market adjustments that lead to less total trade. Two professors recently estimated that under optimistic assumptions, the maximum annual U.S. tariff revenue is about $500 billion. Trump's actual tariffs are projected to raise less than a third of that. But even these substantial tax hikes are small in comparison to America's fiscal problem. Read: Trump's Fed attack adds to fear Treasurys, dollar face emerging-market-style risks No new market access surtax or golden share of corporate profits will raise enough revenue to defuse the debt bomb Congress has set to explode. The federal government borrowed $1.8 trillion last year to sustain high spending while keeping taxes relatively low. If spending continues unchecked, the U.S. will inevitably grow into a European-sized government. That comes with real costs. The only sustainable way to fund big government is through high taxes on everyone, rich, middle-class and poor alike. Europe shows this reality: The average worker there pays about $12,000 more each year through high value-added taxes, higher payroll taxes and higher income taxes that reach deep into the middle class. No amount of creative arithmetic changes basic fiscal facts. And no new market access surtax or golden share of corporate profits will raise enough revenue to defuse the debt bomb Congress has set to explode. The real fix is the old-fashioned one: Restrain spending, broaden the tax base and let free markets allocate resources. No novel revenue sources or market manipulation can substitute. Adam N. Michel is the director of tax policy studies at the Cato Institute. More: Trump has perfected a tax on corporate America - just don't call it a tax. Here's how it could affect stocks. Also read: Trump's Intel move is just the beginning. Why a sovereign wealth fund Is 'a very bad idea.' And: Nvidia has $57 billion in cash. Wall Street has ideas about what to do with it. -Adam Michel This content was created by MarketWatch, which is operated by Dow Jones &amp; Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. <pre></pre> (END) Dow Jones Newswires 08-30-25 1005ETCopyright (c) 2025 Dow Jones &amp; Company, Inc.</div></div>

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Trump's recent business deals with Nvidia and Intel exemplify a shift towards state-directed capitalism, where the government selects corporate winners and imposes unique payments to the U.S. Treasury. This approach, characterized by unconventional revenue sources, distorts economic decision-making and resembles corporatism rather than true capitalism. Critics argue that these arrangements do not significantly address the federal budget deficit and may lead to a reliance on politically motivated revenue streams, undermining market discipline and innovation.

- The article discusses President Trump's approach to U.S. business, highlighting his "state-directed capitalism" and novel taxation methods targeting corporations and consumers.  
- It argues that these strategies, including bespoke payments to the Treasury and tariffs, are ineffective for addressing the federal budget deficit and distort economic decision-making.  
- The author concludes that sustainable fiscal solutions require spending restraint and a broader tax base, rather than reliance on unconventional revenue sources.

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Why Trump's business deals with Nvidia, Intel and other companies are really a tax on all of us