Each party has a different approach. Democrats for the most part see tax reform as a battle over income inequality and the best way to solve that problem is to raise taxes on the wealthy to pay for lowering taxes on middle and lower income individuals. Republicans generally believe that cutting taxes is the path toward economic prosperity and job creation.
Where does the current Presidential field stand on tax reform? Below are a few details about each candidate’s plan.
- Consolidates seven brackets into three, with a top rate of 28%.
- Caps long-term capital gains tax rate at 15%.
- Eliminates the estate tax.
- Lowers top corporate rates to 25%.
- Doubles the R&D tax credit for small businesses.
- Consolidates seven brackets into one at 10%, which applies to all personal income.
- Eliminates all itemized deductions except for charitable and mortgage interest.
- Eliminates the corporate income tax, payroll tax, Alternative Minimum Tax (AMT) and estate tax.
- Creates a VAT of 16% on business profits, rents, royalties, and payroll.
- Enacts a one-time deemed repatriation tax of 10% on foreign profits currently deferred.
- Consolidates seven brackets into three: 10%, 20%, and 25%.
- Eliminates the individual and corporate AMT.
- Reduces the corporate rate to 15% and caps the rate on pass-through business income at 15%.
- Ends tax deferral on overseas corporate income.
- Enacts a one-time deemed repatriation tax of 10% on foreign deferrals.
- Enacts the “Buffett Rule,” 30% minimum tax on income over $1 million.
- Creates a 4 percent “surcharge” on income over $5 million.
- Caps all itemized deductions at a tax value of 28%.
- Limits the total value of tax-deferred and tax-free retirement accounts.
- Establishes business tax credits for profit-sharing and apprenticeships.
- Adds four new income tax brackets for high-income households: 37%, 43%, 48%, and 52%.
- Taxes capital gains and dividends at ordinary income rates for households with income over $250,000.
- Caps all itemized deductions at a tax value of 28% for households with income over $250,000.
- Creates a new 6.2% employer-side payroll tax.
- Eliminates several business tax provisions involving oil, gas, and coal companies.
- Ends the deferral of income from controlled foreign subsidiaries.
- Changes several international tax rules to curb corporate inversions.
- Creates a financial transactions tax.
Be an informed manufacturing voter. Where do your congressional candidates stand on taxes? April may be a good time to find out.
To learn more out about the Presidential candidates’ tax plans, visit the Tax Foundation (www.taxfoundation.org).