Election 2016 – Pocket Guide
As in…how is this election going to hit your pocket book?
The following summarizes each candidate’s tax policy proposals (in no particular order):
Trump’s “Pro Growth Tax Plan” includes the following:
- Reduce the current 7 tax brackets to 3 ranging from 12% for those with taxable income less than $75,000 to 33% from those with taxable income more than $225,000 for MFJ. Rates for single taxpayers will kick-in at half of these amounts.
- Head of Household filing status will be eliminated.
- Capital gains rates will remain the same (20%).
- 3.8% Net Investment Income Tax (Obamacare tax) and AMT will be repealed.
- Standard deduction will increase to $30,000.
- Itemized deductions capped at $200,000 MFJ ($100,000 for single filers). Note that with the increase in the standard deduction, most taxpayers will not need to itemize.
- Above-the-line childcare and eldercare deductions (subject to phase-out for high-income taxpayers)
- Dependent Care Savings Accounts allowing annual contributions of $2,000 per dependent
- Estate tax repealed with provisions for capital gains over $10,000,000 held until death to be taxed.
- Reduce the corporate rate from 35% to 15% and eliminate corporate AMT.
- 10% tax on repatriation of corporate profits held offshore.
- Manufacturers may elect to expense capital investment, but lose deductibility of corporate interest expense.
Clinton’s “Fair Tax System” includes the following:
- Implement a “fair share surcharge” of 4% on taxable income over $5,000,000 per year.
- Implement the “Buffet Rule” which ensures that those making more than $1,000,000 per year pay at least an effective tax rate of 30%.
- Shut down what her campaign is calling the “private tax system” by closing some specific loopholes that benefit VERY high income taxpayers.
- Implement measures to prevent taxpayers from misclassifying income as capital, such as:
- Raising capital gains rate on short-term trading
- Limit benefits of like-kind exchanges
- Retain the 3.8% Net Investment Income Tax (Obamacare tax)
- Close the “step-up in basis loophole” that allows accumulated capital gains to go untaxed when passed on to heirs (with provisions to protect small and closely-held businesses)
- Restore estate taxes to 2009 parameters by lowering the exemption amount (currently around $11,000,000) and increasing estate tax rates as estate tax values rise.