Comparing The Clinton & Trump Tax Plans

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Clinton’s tax reform plan would raise an additional $1.7 trillion over the next 10 years from the wealthy and big corporations, money that would be used to make new investments to create an economy that works for all. Trump’s tax plan would lose nearly $6 trillion; most of the tax breaks he proposes would benefit the wealthy and big corporations.

Unless otherwise sourced this way, all 10-year revenue estimates are from ATF Action Fund’s estimates for Hillary Clinton’s proposals (using Tax Policy Center (TPC), Committee for a Responsible Federal Budget and Clinton campaign estimates) and from TPC’s analysis of Donald Trump’s 2015 Tax Plan, which has changed since it was first published.

 

CLINTON

TRUMP

Taxing the Wealthy Increases taxes paid by the wealthy by $650 billion, raising the taxes paid by the top 1% by $78,000 a year.

·   Limits value of tax deductions (except charitable) to 28% for those in higher tax brackets [$406 billion]

·   Adds 4% surcharge on incomes over $5 million [$126b]

·   Sets a 30% minimum tax rate for taxpayers with income over $1 million (i.e., the Buffett Rule) to ensure that the wealthy pay a fairer share of taxes [$119 billion]

Cuts individual tax rates losing $1.4 trillion, with a significant amount benefitting the wealthy.  

·  Cuts top tax rate from nearly 40% to 33%, giving a tax break of $88,000 a year on average to top 1%.

·  Increases taxes on nearly 8 million mostly low-and middle-income families with children, including more than half of single parents.

 

Taxing Wealth: The Estate Tax Strengthens the estate tax to curb accumulation of dynastic wealth. [$235 billion] Lowers threshold at which estate tax is due to $3.5 million and raises the top rate to 45%. Creates new higher estate tax rates of: 50% on over $10M, 55% on over $50M, and 65% on over $500M. Current estate tax only affects the richest 1 in 500 estates. Eliminates the estate tax, losing $270 billion.

(Reduces lost revenue by requiring wealthy heirs to immediately pay capital gains taxes on inherited assets, with a $10M exemption.) If Trump is worth $10 billion as he claims, his heirs would inherit at least $4 billion more.

Taxing Wealth: Capital Gains Increases capital gains taxes on the wealthy by $234 billion. Requires wealthy heirs to immediately pay capital gains taxes on inherited assets (by ending step-up in basis). [$150 billion] Encourages investors to hold assets longer by extending the holding period to qualify for lower, long-term capital gains rates. [$84 billion] Provides a $192 billion capital gains tax cut to the wealthy. Eliminates the 3.8% tax on investment income above $250,000 per couple under the Affordable Care Act, lowering the top rate to 20%.

(Changes in how inherited assets are valued will reduce the revenue loss).

Taxing Corporations: General Tax Rates Has not announced any corporate tax-rate changes.

·   Eliminates fossil fuel tax incentives [$50 billion]

·   Proposes a fee on financial institutions [$150 billion]

Slashes corporate tax rate by 60%—from 35% to 15%, which loses $2.4 trillion.
Taxing Corporations: Treatment of Offshore Profits Has not announced a position on taxing the $2.4 trillion in existing profits held offshore by multinational corporations. Taxing those profits at the 35% corporate tax rate, less credit for foreign taxes paid, could net up to $700 billion.

·   Raises $275 billion from unspecified business tax reforms to pay for infrastructure investments. Some or all of this is likely the taxation of existing offshore profits.

·   Raises cost and difficulty for companies attempting to lower taxes through various offshore accounting maneuvers such as “inversions” [$92 billion]

Proposes to tax $2.4 trillion in existing offshore profits at a 10% rate, less foreign taxes paid. This would raise about $150 billion—$550 billion less than the up to $700 billion that could be raised from applying the 35% corporate tax rate to those profits.
Taxing Pass-Through Entities: The “Trump Loophole” Closes business tax loopholes on pass-through entities (partnerships, S corps, LLCs) that primarily benefit the wealthy, raising $285 billion.

·   Requires pass-through entities to pay the same 3.8% tax on income above $250,000 per couple that is paid on earned income and income from investments (capital gains, dividends, etc.) above that level. [$250 billion]

·   Eliminates a tax loophole that enables wealthy professionals to avoid payroll taxes by routing their income through a pass-through business. [$35 billion]

May slash the top tax rate on all pass-through entity income to 15%, losing $1 trillion. (Trump’s campaign has offered contradictory information on whether this proposal remains in his plan.) He is the sole or principal owner of 500 pass-through entities. Because he will personally benefit from this tax giveaway, it’s been dubbed the “Trump Loophole.”

 

 

TOTAL Raises $1.7 trillion to pay for new investments Loses about $5.8 trillion

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Revenue Raised Under Hillary Clinton’s Tax Plan

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Americans for Tax Fairness Action Fund estimates that Hillary Clinton’s tax proposals will raise $1.7 trillion over 10 years. About $1.5 trillion will come primarily from wealthy individuals. Tax breaks for working families and small businesses costing about $350 billion will net $1.1 trillion from individuals. Corporate tax increases would amount to $566 billion.

2016-2026
$Billions
INDIVIDUAL, ESTATE & SMALL BUSINESS TAXES
28% cap on deductions (except charitable) $406
4% surcharge on Adjusted Gross Income (AGI) over $5 million $126
Buffet Rule (30% minimum tax on AGI over $1 million) $119
Restore estate/gift taxes to 2009 parameters (45% tax above $3.5 M and a $1M lifetime gift exemption); new higher estate tax rates of: 50% > $10M, 55% > $50M, 65% > $500M. [CRFB estimate 1] $235
Pay capital gains on inherited assets like with normal assets and tax those gains at death [Source: CRFB estimate 1] $150
Increase capital gains based on shorter holding period $84
Repeal carried interest, mark derivatives to market, limit deferral in retirement accounts $40
Eliminate fossil fuel tax incentives $9
Expand 3.8% investment surtax to S corporations, limited partnerships, and LLCs [CRFB estimate 2] $250
Limit the use of like-kind exchanges to $1 million per year when the wealthy and businesses sell property [CRFB estimate 1] $35
Close loophole letting small business owners declare wage income as business income to avoid payroll taxes [CRFB estimate 3] $35
Subtotal Revenue Increases $1,489
   
Expand the Child Tax Credit and offer tax breaks to help families pay for child care [CRFB estimate 2] ($150)
Small business tax cuts: Create a standard deduction, quadruple the start-up tax credit, immediately expense up to $1 million in new investments a year [CRFB estimate 2] ($100)
Repeal excise tax on high-cost health plans (paid by employees through benefit cuts and higher cost sharing) [CRFB estimate 4] ($100)
Subtotal Revenue Decreases ($350)
Subtotal Net Revenue from Individuals $1,139
 
CORPORATE TAXES
Unspecified business tax reform [Clinton estimate 1] $275
International — limiting corporate inversions $92
Eliminate fossil fuel tax incentives $50
Fee on Financial Institutions [Clinton estimate 2] $150
Subtotal Corporate $566
TOTAL $1,705

Sources: The Clinton campaign has not released a comprehensive estimate of the revenue its various tax proposals would raise. Proposals have been released throughout 2016 and in some cases have been updated. The estimates above are primarily from the Tax Policy Center, “An Analysis of Hillary Clinton’s Tax Proposals” (March 3, 2016), http://tpc.io/2cEc0EQ

Additional estimates are from the Committee for a Responsible Federal Budget and the Clinton campaign and are noted in the table as:

CRFB 1: “Clinton Proposes New Taxes to Offset New Proposals,” (Sept. 22, 2016), http://crfb.org/blogs/clintons-additional-taxes-wealthy

CRFB 2: “Promises and Price Tags: A Preliminary Update” (Sept. 22, 2016), http://crfb.org/papers/promises-and-price-tags-preliminary-update

CRFB 3: “Analyzing Clinton’s Health and Education Expansions” (July, 27, 2016), http://bit.ly/2dkRZBG

CRFB 4: “Adding up Secretary Clinton’s Campaign Proposals So Far” (May 2, 2016), http://bit.ly/2d9Unw2

Clinton 1: “Hillary Clinton’s Infrastructure Plan: Building Tomorrow’s Economy Today” (accessed Sept. 23, 2016), http://hrc.io/1TCHJqA

Clinton 2: “Investing in America by Restoring Basic Fairness to Our Tax Code” (accessed Sept. 23, 2016), http://hrc.io/1l5OBNo

On Tax Policy, Difference Between Clinton and Trump Speeches Was All About Priorities

Following this week’s economic speeches by both Donald Trump and Hillary Clinton, Americans for Tax Fairness Action Fund Executive Director Frank Clemente made the following statement:

“This week both candidates for president claimed their economic policies would serve the middle class, but that’s simply not the case. On tax policy in particular, their proposals offer a clear choice to voters in November.

“Donald Trump highlighted a number of proposals that would exclusively benefit big corporations and wealthy people like himself:  slashing the corporate tax rate by 60%; cutting from about 40% to 15% the top tax rate on business partnerships like the 240 he owns; eliminating the estate tax; reducing the top federal income tax rate and more.  He would even give a $500 billion tax break to multinational corporations that are shifting profits offshore with his proposed 10% repatriation rate on $2.4 trillion in existing offshore profits, rather than make them pay the $700 billion they owe.

“Secretary Clinton correctly framed tax policy as a series of tradeoffs.  She said that while Trump’s proposals would give trillions in tax cuts to millionaires and billionaires, she would rather make them pay their fair share so we can invest in ‘veterans, our kids, our police officers and more.’ She proposed an exit tax on deserting corporations, a surtax on millionaires, and to strengthen the estate tax.

“Ultimately, tax policy is about the allocation of the nation’s fiscal resources. It’s about priorities and tradeoffs. This election is shaping up to give voters a clear choice on these issues, which is critical if we are going to create an economy that works for all Americans.