Understanding the Presidential Candidates’ Tax Policies

dem repub

With the primaries over, the conventions in the rear-view mirror and the election still months away, it feels like we are in the “dog days” of the presidential campaign. I am not one to wade into the political debate, but I do like talking taxes. Both the Republican and Democrat nominees have shared certain details of their tax policy, although there remains ambiguity among some provisions. The following is a side-by- side comparison of specific elements we have been able to piece together. Keep in mind that how some of the proposals will be accomplished and the potential impact to the economy or society as a whole are not addressed.

Clearly tax policy is only one of the many factors that define a candidate. Still, hopefully these data points help as you consider the choices for the next leader of the United States. As Thomas Jefferson wrote to William C. Jarvis in 1820, “An enlightened citizenry is indispensable for the proper functioning of a republic.”

 
 

Donald Trump Trump

Hilary Clintonhilary

Overall Tax Plan

Cut taxes by about $12 trillion over next 10 years (per the Tax Foundation estimates) Raise taxes by about $500 billion over next 10 years (per the Tax Foundation estimates)

Individual Taxes

Reduce top individual rate from 39.6% to 25% on $300k+

No tax on income less than $25k ($50k for married)

Eliminate AMT

Individual income brackets: 10%, 20%, 25%

Retain capital gains tax rates, capping at 20% for those with $150k of income ($300k for married); Eliminate the net investment income tax

Eliminate all itemized deductions but charity and mortgage, caps deductibility of interest

Increase top individual rate from 39.6% to 43.6% on $5 million+

30% minimum tax on taxpayers with over $1 million of income (“Buffett rule”)

Create $6k “middle-class” elderly caregiving credit

Retain current seven individual brackets and add 43.6%

Capital gains tax depends on holding period: Short-term of less than 2 years are taxed at ordinary rates; more than 6 years is long-term with a 20% rate; new mid-term rates for assets held 2-6 years; Plus current net investment income tax and 4% surcharge for $5 million+

Cap all itemized deductions at a tax value of 28%

 

Business taxes

Reduce top business rate from 35% to 15%, regardless of size, including pass-thru income to individuals

Reduce/eliminate “corporate loopholes”

Retain most provisions currently in place. Create corporate tax credit for employee profit sharing

Estate tax

Repeal Increase estate tax rate to 45%, reduce exemptions to $3.5 million

Foreign Tax Provisions

End deferral of income of Controlled Foreign Corporations

10% one-time tax on repatriation of foreign income

Eliminate deductibility of reinsurance premiums paid by corporations to foreign subsidiaries

Strengthen rules to discourage corporate inversions

 

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