Tax policy is becoming one of the major issues of the 2016 presidential campaign. How will the upcoming election impact your personal tax situation?
Here is a summation of each candidate’s business, individual and estate tax proposals. This is not an endorsement of either candidate; rather, it’s an overview of their platforms as they pertain to taxes.
- Cut taxes for small businesses by expanding Section 179 expensing, increase the number of businesses that are eligible for cash basis accounting, quadruple the size of the startup deduction from $5,000 to $20,000, create a small business “standard deduction,” and expand the Affordable Care Act credit for small businesses.
- Enact business tax credits for profit-sharing and apprenticeships.
- Reform the Net Investment Income Tax (NIIT) and self-employment taxes, by broadening the NIIT tax base to include more business income.
- Create a 4 percent “surcharge” on high-income individual taxpayers with Adjusted Gross Income (AGI) above $5 million.
- Enact the “Buffett Rule,” establishing a 30 percent alternative minimum tax on taxpayers with AGI above $1 million. The alternative minimum tax (AMT) would phase in between $1 million and $2 million of AGI.
- Adjust the maximum capital gain rate to a rate greater than 20 percent.
- Lower the estate tax exemption amount to $3.5 million per person and enact a progressive rate on estates with a top rate of 65 percent on estates valued at over $1 billion.
- Reduce the corporate income tax rate from 35 percent to 15 percent.
- Eliminate the domestic production activities deduction (IRC Section 199) and all other business credits, except the research and development credit.
- Repeal the NIIT, the corporate alternative minimum tax, as well as the corporate alternative minimum tax.
- Consolidate the current seven individual tax brackets into three, with rates on ordinary income of 12 percent, 25 percent, and 33 percent.
- Adapt the current rates for qualified capital gains and dividends to the new brackets.
- Eliminate the head of household filing status.
- Repeal federal estate and gift tax but disallow step-up in basis rules for estates over $10 million.
Does this help you make your decision or only muddy the waters? Good luck in deciding and choose wisely!