Differences between Trump and Clinton tax plans


November is nearing and one of the topics the two US presidential candidates differ from each other the most is on US Tax policy. What are the key differences between Trump and Clinton tax plans?

4 October, AtoZForex – The tax plans of both Hilary Clinton and Donald Trump is one of the facets that differ from each other the most. In the bigger picture, no major changes are expected to the current tax plans. However, the approaches of each Clinton or Trump will have consequences on the US households, business and investors.

On one hand, Donald Trump’s overall tax plans are in line with the previous Republican presidential candidates, proposing tax cuts for businesses and citizens. Although, he hasn’t provided a very detailed tax plan yet and left a key component ambiguous. On the other hand, Hilary Clinton proposes to increase taxes on the wealthy households to fund the Democratic plans, like expanding the access of higher education. To gain a better understanding of the differences between Trump and Clinton tax plans, please find below the other tax proposals.

Taxes on higher incomes

Donald Trump:

  • Cut top income tax bracket to 33% from 39.6%
  • To boost after-tax income of 1% wealthiest taxpayers
  • Cap tax deductions at $200k per household

Hilary Clinton:

  • 4% Surcharge on >$5mln income, creating a new top bracket of 43.6%
  • 30% tax rate on earnings >$1mln
  • Cap the value of tax deductions for wealthier taxpayers
  • Increase taxes for 1% wealthiest by $78,284
  • Reduce 1% wealthiest after-tax income by 5%

Taxes on middle incomes

Donald Trump:

  • Reduce from 7 to 3 tax brackets; at 12%, 25% and 33%.
  • Raise the standard deduction to $15,000 for singles and $30,000 for households

Hilary Clinton:

  • No raise of taxes on the middle class
  • Proposals would have little impact on the bottom 95% of taxpayers

Corporate tax rate

Donald Trump:

  • Cut corporate tax rate from 35% to 15%
  • According to the nonpartisan Tax Foundation this would cost an extra $1.5 trillion which supports lower tax rates

Hilary Clinton:

  • No change of corporate tax rate

“Carried interest” loophole

Donald Trump:

  • Eliminate the “Carried interest” loophole
  • Private equity firms and hedge funds managers are allowed to classify their profits as “carried interest”
  • Pay capital gains taxes on their income, at the rates that are as low as half the regular income tax rate

Hilary Clinton:

  • Eliminate the “Carried interest” loophole
  • Levy tax on “Carried interest” as ordinary income

Corporate inversions

Donald Trump:

  • Cut in the corporate tax rate would end the practice of corporate “inversions”
  • Only tax repatriated corporate money at 10% to encourage businesses to bring back inversions into the US

Hilary Clinton:

  • Discourage inversions: Raise difficulty for US firms to classify itself as a foreign-owned, end of US taxation avoidance
  • Introduce an “exit tax” on US firms that leave the country and keep earnings overseas that haven’t been subject to US tax

In overall it is clear that the differences between Trump and Clinton tax plans are one of the campaign subjects that the two presidential candidates differ the most. Despite, both candidates don’t propose significant changes to the tax plans, it is obvious that the taxes will increase if Hilary Clinton wins, while taxes will decrease if Donald Trump wins.

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