It is getting down to crunch time. Here is how your vote will affect your paycheck:
Trump has offered a number of amendments to his Tax Plan Proposal. As you may expect, Hillary and friends say his plan favors the “rich” more than it should.
Are they telling the truth? And what of Hillary’s plan? Does she really favor the middle class?
Let’s take a look.
The Daily Caller reports:
“The Trump campaign has significantly scaled back several of the largest tax cuts that it proposed last September. For instance, the campaign’s original proposal called for a standard deduction of $50,000 for married households and three brackets of 10%, 20%, and 25%. The latest version of the plan calls for a standard deduction of $30,000 for married households and three brackets of 12%, 25%, and 33%,” Scott Greenberg, analyst with the Center for Federal Tax Policy at the Tax Foundation, told The Daily Caller News Foundation.
In addition to these changes, Trump’s new plan features proposals “that would offer tax relief to families with children. For example, the latest version of the Trump plan would offer an above-the-line deduction for the average cost of childcare, as well as a credit of up to $1,200 for childcare expenses,” Greenberg explains to TheDCNF.
The possible bad news for families is that the Trump plan’s credit for childcare expenses “would not apply to expenses for children over 13.” This could have adverse effects on “low-income families with children over 13,” because these families could “see higher taxes as a result of the plan,” Greenberg tells TheDCNF.
Industries Most Affected By The New Plan
“The plan has added a provision that would offer manufacturing companies the choice to deduct the full cost of their capital expenses (‘full expensing’) in exchange for no longer being able to deduct net interest payments,” Greenberg explains to TheDCNF. Elaborating on this point, Greenberg says that some manufacturing companies, likely those with high levels of investment and low debt burdens, “may choose to take advantage of this opportunity to lower their overall tax bill.”
Over the last two years, manufacturing accounted for around 11-12 percent of the U.S. GDP. Giving tax breaks to a sector of the U.S. that produces over ten percent of our annual GDP could have many beneficial effects on growth and employment in the coming future.
Does This Plan Spur More Growth Than The Previous One?
The Tax Foundation’s original estimates of the Trump 2015 tax plan were that the U.S. economy “would have grown long-run GDP by 11.5 percent,” Greenberg tells TheDCNF. The Foundation’s new estimates calculate that the U.S. economy would experience an “increase in long-run GDP by 6.9 percent.”
One factor which Greenberg finds particularly germane to average Americans, concerns possible caps on business “pass through” income, which he estimates could “increase long-run GDP by 8.2 percent.”
Final Thoughts On The Trump Tax Plan
“Households at all income levels are likely to see lower taxes, with high-income households receiving the largest tax cut from the plan,” Greenberg concludes to TheDCNF.
It is no surprise, Hillary says that she will raise taxes. She won’t even guarantee that the middle-class will remain untouched.
Here are the details, as reported by ATR:
Hillary Clinton has proposed an income tax increase, a business tax increase, a death tax increase, a capital gains tax increase, a tax on stock trading, an “Exit Tax” and more (see below). Her planned net tax increase on the American people is at least $1 trillion over ten years, based on her campaign’s own figures.
Hillary has endorsed several tax increases on middle income Americans, despite her pledge not to raise taxes on any American making less than $250,000. She has said she would be fine with a payroll tax hike on all Americans, she has endorsed a steep soda tax, endorsed a 25% national gun tax, and most recently, her campaign manager John Podesta said she would be open to a carbon tax. It’s no wonder that when asked by ABC’s George Stephanopoulos if her pledge was a “rock-solid” promise, she slipped and said the pledge was merely a “goal.” In other words, she’s going to raise taxes on middle income Americans.
Hillary’s formally proposed $1 trillion net tax increase consists of the following:
Income Tax Increase – $350 Billion: Clinton has proposed a $350 billion income tax hike in the form of a 28 percent cap on itemized deductions.
Business Tax Increase — $275 Billion: Clinton has called for a tax hike of at least $275 billion through undefined business tax reform, as described in a Clinton campaign document.
“Fairness” Tax Increase — $400 Billion: According to her published plan, Clinton has called for a tax increase of “between $400 and $500 billion” by “restoring basic fairness to our tax code.” These proposals include a “fair share surcharge,” the taxing of carried interest capital gains as ordinary income, and a hike in the Death Tax.
But there are even more Clinton tax hike proposals not included in the tally above. Her campaign has failed to release specific details for many of her proposals. The true Clinton net tax hike figure is likely much higher than $1 trillion.
Capital Gains Tax Increase — Clinton has proposed an increase in the capital gains tax to counter the “tyranny of today’s earnings report.” Her plan calls for a byzantine capital gains tax regime with six rates. Her campaign has not put a dollar amount on this tax increase.
Tax on Stock Trading — Clinton has proposed a new tax on stock trading. Costs associated with this new tax will be borne by millions of American families that hold 401(k)s, IRAs and other savings accounts. The tax increase would only further burden markets by discouraging trading and investment. Again, no dollar figure for this tax hike has been released by the Clinton campaign.
“Exit Tax” – Rather than reduce the extremely high, uncompetitive corporate tax rate, Clinton has proposed a series of measures aimed at inversions including an “exit tax” on income earned overseas. The term “exit tax” is used by the campaign itself. Her campaign document describing this proposal says it will raise $80 billion in tax revenue, but claims some of the $80 billion will be plowed into tax relief. How much? The campaign doesn’t say.
With all of the uncertainty surrounding this election, we can all know that, in general, Trump should lower some taxes, and Hillary should raise them.