Ag Policy Blog

Clinton, Trump and Their Plans for Your Taxes

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Much like everything else in this campaign, Hillary Clinton and Donald Trump offer opposing policy perspectives on taxes. Trump spoke about the economy on Monday in Detroit while Clinton is scheduled to counter with a speech on Thursday in Warren, Mich., which is in the same metro area as Detroit.

Pulling details from Clinton and Trump websites as well as the Tax Foundation and other sources, here are some differences between the two candidates on the Tax Code.

Trump Tax Plan

Income Taxes:

Trump on Monday highlighted that his tax plan would change current law to go from seven tax rates down to three: 15%, 25% and 33%. This meshes with the House Republican plan released earlier this year that proposed rates of 12%, 25% and 33%.

Trump campaign did not detail the income levels that would move someone into a higher tax bracket. I asked the Trump campaign if there were details on income levels associated with the separate rates, but did not get a response.

The Tax Foundation examined the House GOP plan earlier this showed a married couple, filing jointly, would be in the following tax bracket levels:

12% - $0 - $75,300

25% - $75,301 - $151,900

33% - $151,901 +

Trump also proposed lowering the 35% corporate tax rate to 15%, which compares with 20% proposed in the House GOP plan. But Trump's plan would also cap some business interest deductions and tax overseas profits.…

Capital Gains:

Rates on long term capital gains under Trump would be 0% to 20%, which is the same as current law. That would differ from the House GOP plan to adjust capital-gains rates to 6%, 12.5% and 16.5%.

Trump's website does not state it, but Trump has frequently declared he would impose import tariffs on U.S. companies of 30% to 35%.

Estate Taxes:

Trump's plan would eliminate the estate tax. The current estate tax exemption is $5.45 million for an individual, or up to $10.9 million for a couple and the top tax rate is 40%.

Affordable Care Act:

Trump would eliminate "Obamacare" early in his administration and along with it the 40% on high-end "Cadillac" insurance plans. Along with that, the 3.8% Medicare surtax on investment income would be eliminated as well.

Clinton Tax Plan

Clinton's campaign focuses on higher taxes for the wealthy. Her first bullet point on her website regarding taxes is a "fair share surcharge" on people making more than $5 million a year. Those higher income people would face a 4% higher tax "surcharge," according to the Clinton campaign.

Clinton would also push to install the so-called "Buffett Rule" proposed by Warren Buffett. Under the rule, households earning more than $1 million a year would have to pay at least an effective rate of 30%. The rule would essentially put a lid on income deductions and tax credits those households could receive.

Clinton's plan would "close loopholes" in various ways. One, Clinton proposes to eliminate "carried interest," which allows hedge-fund and equity managers to be taxed at a lower rate than ordinary income. Her plan also would restrict off-shore and retirement tax shelters used wealthier people to lower their taxable income.

Corporate Taxes:

Clinton has not stated whether she supports any change in the corporate tax rate. The campaign website indicates she would push charge an "exit tax" on earnings for companies leaving the U.S. She proposed this as a way to curb corporate "inversions."

Capital Gains:

Clinton would raise taxes on investments held under six years to a rate ranging from 24% to 39.6%.

Estate Tax:

The current estate tax exemption is $5.45 million for an individual, or up to $10.9 million for a couple and the top tax rate is 40%. Clinton wants to revert back to 2009 levels with an estate tax exemption of $3.5 million for an individual or $7 million for a couple with a maximum tax rate of 45%. Clinton also proposes to reduce the use of trusts to avoid paying estate taxes.

Affordable Care Act taxes:

Clinton proposes capping premiums under the Affordable Care Act to 8.5% of household income. Clinton also has proposed a tax credit of up to $5,000 for cover health premiums over 5% of income.

Her plan also would keep the 3.8% Medicare surtax on investment income.

While Clinton's website does not address the issue, the Democratic Party platform calls for repealing the excise tax on high-cost health insurance, a/k/a, the 40% tax on "Cadillac" insurance plans, but the party proposes unknown offsets to pay for the elimination of that tax.

MarketWatch had a similar piece highlighting some of the tax proposals for each candidate.…

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Thomas Runholt
8/11/2016 | 2:56 PM CDT
Nobody ever addresses farm and small business specific needs of how to transfer business capital assets between generations in and out of the family short of death and inheritance while leaving intact enough of the earning power of the asset to make the transfer practical, A second issue concerns the toxic combination of self-employment tax plus state and federal income tax leading to an overall marginal rate on moderate level incomes that exceed the marginal rates assessed on our highest earners. While you can accumulate deprecable assets tax efficiently. putting money into a land base is hard unless you already have a high income. This situation intensifies as the maximum amount of income taxed for social security goes up each year and would be overwhelming if all earned income would become subject to SE tax as proposed by many politicians, A couple of suggestions: We need a small business IRA option whereby owners at retirement could transfer capital assets into a IRA/401K type instrument without paying Capital Gains tax. You would pay taxes at ordinary rates on money you remove from the IRA and be subject to the same minimum distributions rules in place for existing plans. Also, in taking this option you would give up any capital gains discount potential for money you accumulate the plan, for yourself or your heirs. Concerning the second issue; I think there should be a cap or discount reducing the SE double tax on money put into non-deprecable capital business assets, Right now the cap on social security tax is near $113,000 and raises every year. How about allowing letting the individual 7.65% tax rate cap expand as it does for everybody each year; but limit business portion of the tax to half the basic rate on self employed individuals who put the money back into their businesses. This benefit could be phased out at higher income levels,
8/11/2016 | 10:06 AM CDT
Jay what planet you from? What the hell is a nuclear winter? If it's cold I'll be fine,if it's warm that will work too.
Jay Mcginnis
8/11/2016 | 7:40 AM CDT
How will your farm do in a nuclear winter?
8/10/2016 | 9:26 AM CDT
I don't see one good thing for anyone under Clintons plan, Nothing for farmers JAY!!!!