You’ve just watched several news stories about the 2016 presidential campaign on television. Here is what you have learned -- Donald Trump says Hillary Clinton is a lying crook and Hillary Clinton says Donald Trump is a profane racist.
You walk away from the television angry and confused. You think to yourself ‘I need to know how a President Hillary Clinton or a President Donald Trump will affect my life in the next four years and I am learning nothing about their plans by watching television.’
Fortunately, there is plenty of information out there about Trump and Clinton’s proposals for governance. Sometimes, you need to look for it, but DoTax has decided to do some of your work for you by researching the two leading presidential candidates’ tax plans. This information could help your tax preparation efforts and reduce the chance that you will have to spend a lot of money on a tax accountant. DoTax, of course, can still help you with the tax preparation services that you need.
How will Clinton and Trump’s tax plans affect you? The answer depends on who you are -- how much money you earn and other individual factors that affect your taxable income and tax rates. The differences between the plans could have a great effect on your life because the two candidates “offer Americans a stark choice in 2016, especially when it comes to taxes,” according to the Money magazine article “What the Clinton and Trump Tax Plans Would Mean For You.”
“Trump’s plan calls for a fairly radical simplification of the tax code that would create four brackets—0%, 10% 20%, and 25%—and give just about everyone a dramatic tax cut,” the article reports. “Clinton’s relatively modest plan, meanwhile, would leave income tax rates unchanged for all but the wealthiest Americans, who could see effective rates climb by as much as five percentage points, according to the Tax Policy Center.”
The Kiplinger article “Where Clinton and Trump Stand on Taxes” notes that Trump indicated in an August 8 speech at the Detroit Economic Club that he was open to having a maximum tax rate of 33 percent rather than 25 percent. The Clinton plan, the article said, would have a minimal effect on taxes for most Americans with middle-income households paying about $44 more per year but would increase taxes on the wealthiest 1 percent of Americans by $78,000 annually and hike taxes on the wealthiest 0.1 percent by about $520,000 annually.
The Forbes magazine article “It's Clinton Versus Trump: A Comparison Of The Final Two Tax Plans” has an excellent chart that compares the two plans. It notes that:
- * The two plans’ proposals for a maximum tax rate on capital gains is dramatically different with Clinton proposing a top rate of 47.4 percent and Trump proposing a maximum tax rate of 25 percent.
- * Trump’s plan eliminates the estate tax and reduces the maximum corporate tax rate from 35 to 15 percent.
- * Clinton’s plan limits itemized deductions to 28 percent of income, while Trump’s plan reduces itemized deductions claimed by married people who earn more than $300,000 annually and single people who earn more than $250,000 annually.
- * Trump’s plan would repeal the alternative minimum tax that requires people to pay a 26 percent tax rate on their first $185,400 of income above their tax exempt income and pay a 28 percent rate on additional income, while Clinton’s plan would ensure that people who earn above $1 million annually pay a minimum tax rate of 30 percent (the Warren Buffett rule).
When Bernie Sanders was still actively challenging Hillary Clinton, but after Donald Trump had clinched the GOP presidential nomination, a nonpartisan tax research group called the Tax Foundation analyzed the tax plans of Clinton, Sanders, and Trump. The Tax Foundation published a chart under the headline “How do the 2016 Presidential Tax Plans Compare So Far?” The chart has details about the three candidates’ plans for business taxes as well as individual taxes.
Americans should look at the positions that Clinton, Trump, and the other candidates have on many crucial issues before voting, but the candidates’ tax plans could be as important as any of their proposals -- and they are certainly being overlooked in a very heated campaign.