Are you for Trump, or do you prefer Clinton? For many Americans it appears to be a choice between bad or worse. No matter who you choose, one thing is clear, most people will be ecstatic when this election finally over. It has been an all-out war since the candidates put on their gloves and entered the ring, with each taking jabs one after the other in hopes of delivering a knockout blow. From serious accusations against Donald Trump regarding sexual improprieties to leaked emails from Hillary Clinton’s private server account, this has been a non-stop battle that appears to have our country more divided than ever. The good news is it will soon be over, with the election now just days away.
Taxes Are a Hot Topic
One of the biggest issues at the heart of this election – not unlike almost any other election – are taxes. Of course, it comes as no surprise to anyone that both candidates have tax plans that are essentially polar opposites. While each candidate claims his or her plan will be in the best interest of the country and will bring about the most favorable results for everyone (except for big business and the wealthy in Clinton’s case), they have almost nothing in common. In fact, the two candidates agree on almost nothing, when it comes to taxes. So, if you are one of those undecided voters that is still waiting for one of the candidates to reach you – or if you think you have decided but could still be persuaded in the other direction – then perhaps having a better understanding of how these two tax plans will affect you could be the deciding factor.
Trump’s Stated Tax Plan
These are the key findings of the Trump Tax Plan:
- It would greatly reduce individual income taxes and the corporate income tax and simplify the current tax code.
- It would reduce taxes across the board by $11.98 trillion over the next 10 years. It would also reduce tax revenues by $10.14 trillion over the same time period.
- Based on the Tax Foundation’s Taxes and Growth Model, the plan would greatly lower marginal tax rates and the cost of capital. This would cause the GDP to increase by 11 percent over the long term.
- Trump’s plan would see a 29 percent larger capital stock, 6.5 percent higher wages, and up to 5.3 million more full-time equivalent jobs.
- His plan would also cut taxes for all income levels, which would lead to more after-tax income for all taxpayers.
Simplicity Is the Key
Under Trump’s plan the tax code would be simplified, starting with just three income brackets:
- Joint filers making less than $75,000 would pay 12 percent.
- Joint filers making $75,000 to $225,000 would pay 25 percent.
- Joint filers making more than $225,000 would pay 33 percent.
Tax brackets for single filers would be half as much as the rates for joint filers. He wants to increase the standard deduction to $30,000 and $15,000 and cap it at $200,000 and $100,000. He wants to completely do away with the estate tax, and he would allow parents to deduct the full cost of childcare. He also wants to reduce the corporate tax rate from 35 percent to 15 percent, and at the same close loopholes that allow companies to avoid much of their tax bill.
Clinton’s Stated Tax Plan
Here are some of the major points of the Clinton Tax Plan:
- Clinton has promised to change several policies aimed at raising taxes on individual income, increasing tax credits, and reforming business taxation.
- Based on the Tax Foundation’s Taxes and Growth Model, her plan would boost federal tax revenue by $1.4 trillion throughout the next 10 years on a static basis.
- Clinton’s plan would also increase marginal tax rates on both businesses and individuals, leading to a 2.6 percent lower level of GDP. This plan would also affect the smaller long-run economy, leading to lower wage levels and full-time equivalent jobs.
- Taking into account the smaller economy and narrower tax base, her plan would end up increasing revenue by $663 billion.
- This plan would also make the tax code more progressive and would reduce the top 1 percent’s after-tax income by 6.6 percent. On the other hand the after-tax income of all other income levels would increase by at least 0.1 percent.
The Wealthy Pay a High Price
Under Clinton’s plan, the nation’s top earners will pay a more in taxes. For starters she is proposing a “Fair Tax Surcharge” of 4 percent for anyone who makes more than $5 million a year. She also wants to eliminate several loopholes that allow the wealthiest individuals and corporations to greatly reduce their effective tax rate. That would mean wealthy Americans would pay no less than 30 percent. Clinton wants to increase the estate tax rate and raise it as the value of the estate increases, topping out at 65 percent for estates worth $500 million or more. She also favors limiting retirement accounts and increasing the amount of time an investor has to hold onto a stock before they qualify for the lower capital gains tax rate.
Middle Class Relief
Meantime, under Clinton’s plan the middle and lower class could seem some changes, but in reality she is proposing that the tax code for these individuals remain largely the same. She has said she would double the child tax credit to $2,000 for each child and she wants to make the tax process for small businesses much less complex. Overall, Clinton’s plan would hit wealthy earners and big businesses the hardest, and would account for a tax revenue increase of about $1.1 trillion. She has proposed using this additional revenue to pay for domestic agenda.
What About You?
There are many factors to consider when it comes to choosing a president, not the least of which is his or her tax policy. While no one can be certain if any candidate will stick to his or her stated plans after being elected, this gives you a better idea of where each candidate stands on taxes and how those proposals might affect you. So get out and vote on November 8 and then celebrate that it’s finally over.