Each candidate has released their tax plan, and the International Business Times has crunched the numbers on how it’ll effect your bottom line.
Trump has the most generous tax plan. According to the Tax Foundation, Trump’s tax plan would:
- Consolidate 7 brackets into three: 10 percent, 20 percent, and 25 percent.
- Increase the standard deduction to $25,000 for single filers and $50,000 for married filers.
- Steepen the curve of the personal exemption phase-out and the Pease limitation on itemized deductions.
- Eliminate the Alternative Minimum Tax, the 3.8 percent Net Investment Income Tax, and the Estate Tax.
- Tax carried interest as ordinary income.
Obviously those at the top of the income distribution benefit the most in absolute dollars, however, even if every American got an equal percentage tax cut, the rich would still disproportionately benefit simply because they bring in more income.
Cruz’s plan is similar to Trump’s in terms of how much money the average America will save, though the benefits are more skewed to the top than Trump. While Trump wants three income brackets, Cruz’s tax plan would implement a flat tax of 10%.
The Sanders tax plan is brutal. It would
- Add four new income tax brackets for high income households, with rates of 37 percent, 43 percent, 48 percent, and 52 percent.
- Create a new 6.2 percent employer-side payroll tax on all wages and salaries.
- Apply the Social Security payroll tax to earnings over $250,000, a threshold which is not indexed for wage inflation.
And that’s just part of it….
The cost of free to a household earning $55,000 (which is about the median household income in this country) is an extra $3,852 a year in tax. Americans would also be slapped by the negative effects such taxes would have on the economy.
It’s estimated by the Tax Foundation that over ten years we’d see a loss of 5.9 million jobs, 4.3% decline in wage growth, and a 9.5% decline in GDP growth. Taxes are only part of the cost of a Sanders presidency.
Clinton’s plan is the most moderate. Among it’s features would be to:
- Creates a 4 percent “surcharge” on highincome taxpayers, which effectively add an additional marginal tax rate of 43.6 percent for taxable income over $5 million and a 24 percent top marginal tax rate for qualified dividend and long-term capital gain income.
- Enact the “Buffett Rule,” which would establish a 30 percent minimum tax on taxpayers with adjusted gross income (AGI) over $1 million.
- Adjust the schedule for long-term capital gains by raising rates on medium-term capital gains to between 27.8 percent and 47.4 percent. • Limits the total value of tax-deferred and tax-free retirement accounts.
As you can imagine from the image above, Hillary’s plan only targets a small percentage of the tax base.
With Hillary and Trump the likely nominees, there’s surprisingly some good news for your tax bill regardless of who is President. It’ll either stay flat or decrease.