The Candidates’ Tax Plans by Richard Rubin and Katie Marriner

Presidential candidates in both parties are seeking ways to boost middle-class incomes, and they’re all turning to the tax code as a main tool. Here’s a look at how they would alter the tax code.

Some candidates would retain a progressive income tax but cut rates and reduce the number of tax brackets. Lower rates are aimed at increasing the incentives for people to work and invest. In many of the plans, the gains are concentrated among high-income households. Most of the plans also collect less money than the current tax system does, which likely would increase or requiring spending cuts.

Lower rates for business and individuals

Remove or limit many tax breaks

Continue taxing income

Preserve breaks for charity and often mortgages.
Top individual income tax rate

(current is 39.6%)

Business tax plan

(current corporate rate is 35%)

Other key features

Jeb Bush

28%

20%

for corporations

  • State and local deduction ended.
  • New break for lower-earning spouses.
  • Full and immediate writeoff of capital investments with no interest deduction.

Ben Carson

14.9%

14.9%

for all businesses

  • Abolishes all tax credits and deductions.
  • Eliminates taxes on estates, capital gains, dividends and interest.
  • Tax rates apply above 150% of federal poverty level.

Chris Christie

28%

25%

for corporations

  • Caps most deductions.
  • Says his plan would be revenue neutral.

John Kasich

28%

25%

for corporations

  • Full writeoff of capital investments.
  • Expand earned-income tax credit.

Marco Rubio

35%

25%

for all businesses

  • No taxes on capital gains and dividends from new investments.
  • Adds a $2,500 child tax credit.

Rick Santorum

20%

20%

  • Consolidates deductions and creates a $2,750 per-person credit.
  • Adds tax breaks for manufacturing.

Donald Trump

25%

15%

for all businesses

  • Removes individuals with income under $25,000 and married couples under $50,000 from income tax.

Republicans Who Want Something Huge and New

These plans would mark dramatic departures from the way the U.S. has collected revenue for many decades. One goal, proponents say, is to produce big economic gains by increasing the tax advantages for saving and investing. Those changes would shift some of the tax burden to retirees and to lower-income households, who spend a greater share of their income and have less ability to save than do higher-income taxpayers. These plans would likely increase budget deficits or require significant spending cuts.

Blowing up the current system

Replacing with consumption tax

Taxes fall more heavily based on what you spend, not what you make.

Lower income tax
Top individual income tax rate

(current is 39.6%)

Business tax plan

(current corporate rate is 35%)

Other key features

Ted Cruz

10%

16%

value-added tax

  • Keeps mortgage and charity deductions and adds tax-deferred savings accounts.
  • Businesses will be able to deduct investments.

Carly Fiorina

N/A

N/A

  • Says she would take the thousands of pages in the tax code and replace them with three.

Mike Huckabee
Replaced with national sales tax Replaced with national sales tax
  • All households get monthly payment to cover basic expenses.

Rand Paul

14.5%

14.5%

value-added tax

  • Preserves mortgage and charity breaks on income tax and low-income credits.
  • Businesses can deduct investments.

Democrats seek money to expand programs

Democratic presidential candidates tend to view tax policy as an instrument for their broader aims. They have proposed to raise taxes on high-income households and use the money to expand programs and provide aid to middle-income and lower-income families.

Hillary Clinton
  • Higher capital gains rates on assets held for one to six years.
  • Cap on some tax breaks for high-income households
  • Buffett Rule of minimum 30% tax rate on top-earning taxpayers
  • Tax on high-frequency trading
  • 4% “Fair Share Surcharge” on taxpayers making more than $5 million a year.
  • Debt-free tuition at public colleges
  • Infrastructure plan to rebuild roads and bridges.
  • Expanded childcare assistance

Bernie Sanders
  • 0.2% payroll tax increase to pay for family leave program
  • Estate tax starting at $3.5 million instead of $5.45 million.
  • Financial transactions tax
  • Impose Social Security payroll tax on wages above $250,000
  • Health plan requires new 6.2% business payroll tax, 2.2% income tax for all and top rates up to 52%.
  • Expanded Social Security benefits
  • Free tuition at public colleges
  • Universal health care and child care

Martin O’Malley
  • Impose Social Security payroll tax on wages above $250,000
  • Create a financial transactions tax
  • Increase aid to students with goal of free public college attendance
  • Expand Social Security benefits

Originally Posted on WSJ.com 

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