While the election is kicking into high gear, there may be many reasons why you may choose one candidate over the other. Or, you just may choose to vote for one of the independents this year. Since I write a column mostly about smart money moves, it might be in the best interest of your family to understand the basics of what the candidates are proposing for tax overhaul and reform. Here is the high level of Trump v. Clinton for income taxes.
- PERSONAL INCOME TAX
- Trump is proposing we move to four tax brackets 0%, 10%, 20%, 25%. More importantly, he is wanting to make the standard deduction for single people at $25,000 and for married couples $50,000 which means those families will pay no tax at all.
- Clinton is going to hold the same general similar tax bracket structure we have in today's world. However, she is looking to make two major changes: one being a 4% surtax on those making more than $5,000,000 and install a "Buffett Rule" which means no matter how many loopholes you have, you will pay a 30% minimum tax if your adjusted gross income is over $1,000,000.
- CAPITAL GAIN TAX
- Trump starts the long capital gain rate (assets held more than a year) at zero and has a maximum rate of 20%.
- Clinton has a big change by moving short term capital gains from one year to two years which is important for stock traders and executives who own company stock. She also raises rates on medium-term capital gains (investments held for less than six years) to between 27.8% and 47.4%.
- ESTATE AND GIFT TAXES
- Trump is calling for a total repeal of estate and gift tax.
- Clinton is looking to reduce overall estate tax/gift tax deduction to $3,500,000 per person (7mm married) and sets the top estate tax rate at 45%.
- CORPORATE TAX
- Trump is proposing to reduce to 15%.
- Clinton has no proposal yet on corporate tax rate, but planning to assess "risk fee" on financial institutions. This fee will be a tax on banks or financial institutions that put more financial stress on the system.
- TAX CREDITS
- Trump has no proposal as of yet, but unlikely there will be credits given the tax reform he is recommending and simplification of tax code.
- Clinton is looking to establish eight to ten different tax credits most notably a credit for business owners who share profits with employees, apprenticeships, and people who have to care for the elderly (caregiver credit).
Sources:
http://taxfoundation.org/comparing-2016-presidential-tax-reform-proposals
http://taxfoundation.org/article/details-and-analysis-hillary-clinton-s-tax-proposals
http://www.taxpolicycenter.org/publications/analysis-donald-trumps-tax-plan/full
http://www.thefiscaltimes.com/2016/05/17/Grading-Hillary-Clinton-s-Tax-Planhttp://taxfoundation.org/comparing-2016-presidential-tax-reform-proposals
Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.
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