Redpath Insights

2016 Election - Tax Positions Compared

by John Kammerer, CPA

Not surprisingly, the tax positions of our presidential candidates differ dramatically, and that is especially true between the parties. Some of the changes proposed by the candidates could significantly alter the current tax system.

The Tax Foundation, a not-for-profit independent tax policy research organization, recently published a study comparing the candidates’ tax policies and the economic impact of the proposals.  A few of the proposals are listed below.

Clinton Proposals

  • Surcharge of 4% to the tax rate for high income taxpayers (over $5 million).
  • Enact the "Buffet Rule" which puts a minimum tax in place for taxpayers with adjusted gross income over $1 million.
  • Redefine long-term capital gains to more than 6 years with varying rates for less than 6 years
  • Enacts a tax on high-frequency trading

Sanders Proposals

  • Adds four new tax brackets with a top rate of 52% and taxes capital gains rate at ordinary rates if household income exceeds $250,000
  • Caps itemized deductions at a 28% rate if household income exceeds $250,000
  • Eliminates the alternative minimum tax, the personal exemption phase out and the Pease Limitation on itemized deductions
  • Creates a new 2.2% income based "health care" premium paid by households as well as creating an additional 6.2% employer side payroll tax and a new 0.2% employer/employee payroll tax.
  • Applies the social security payroll tax to earnings over $250,000
  • Eliminates deferral of income from controlled foreign subsidiaries
  • Limit like-kind exchanges of property to $1 million per taxpayer per year and prohibit the use of like-kind exchanges for art and collectibles.

Trump Proposals

  • Consolidates seven brackets into four brackets with rates of 0%, 10%, 20% and 25%
  • Increases the standard deduction to $25,000 ($50,000 for married filing joint)
  • "Steepening the curve" on the personal exemption and Pease limitation phase-out’s
  • Eliminates the alternative minimum tax, the 3.8% Net Investment Income Tax, and the estate tax systems
  • Reduce the corporate income tax rate to 15% and cap the rate of tax on flow-through business income to 15%.
  • Eliminates deferral of income from controlled foreign subsidiaries
  • Enacts a one-time deemed repatriation tax of 10% on all currently deferred foreign profits

Tax policy appears to be a key issue in the presidential election discussion. The positions listed here are based upon the initial plan laid out by the candidates but will likely change and be refined over the course of the election.  Given the push from all candidates to reform the tax laws, it will be important to research the candidates’ positions and understand the implications as you head to the polls.

To access the full publication including an estimate of the economic impact from the Tax Foundation click here.

John Kammerer, CPA

John Kammerer, CPA

John Kammerer is a partner at Redpath and Company and holds a seat on the firm’s board of directors. He leads the firm’s business tax service area, assisting clients with tax planning and preparation, research, entity structuring, and M&A transactions. John works with a variety of clients in industries such as manufacturing, construction, real estate, and professional services. He is a frequent presenter on topics of business taxation and entity structuring. John is also a member of the S Corp Association advisory board and is actively involved with the group to promote and support tax policies that positively impact S Corporations and privately-held businesses. John graduated from Winona State University with a Bachelor of Science degree in Accounting. He is a member of the American Institute of Certified Public Accountants (AICPA) and the Minnesota Society of Certified Public Accountants (MNCPA). He has provided public accounting services at Redpath and Company since 2004.