What Red and Blue Want to Do with Your Green


election, taxes, tax policy, tax code
Election news got you hot under the collar?
Cool down with an informed look at the numbers.

I've never been one to hold back from speaking my mind. That old adage about never discuss politics or religion? Never made sense to me. I figure why not talk about it, if it comes up? We can all be grown-ups, right?

But this election cycle has made me change my mind. Just the whiff of a mention of one or the other candidates is enough to get grown people started acting like playground bullies. It's bad in person, but the way people blast their own friends on social media is even worse.

Makes me wish I could crawl into a hole and come out in four years when it's all over. But I can't, because being an American (and being a grown-up) means being informed.

That's what today's post is all about.

Trigger warning: if hearing/reading a candidate's name is enough to ruin your day, maybe just skip this one.

Keep Calm and Get Informed

Right off the bat, let me say that I'm NOT trying to endorse a particular candidate here or start a fight in any way.

The Bottom Line just wants you to be informed on everything that relates to your finances, your small business growth and your taxes.

This post is just meant to inform you about what we know regarding the two major presidential nominees' tax plans so far.

It's important to keep in mind that every tax plan involves tradeoffs. Increased funding in one area means decreased funding in another. It's easy to assume “tax break” = good and “tax increase” = bad, but sometimes those terms aren't as simple as they sound.

Again, it's important to be informed. That means knowing more than just which party or which candidate you like better–know what you're actually voting for.

[Tweet “When you vote, know more than which party/candidate you like. Know what you're actually voting for.”]

The Low-Down

For a good long while in this election, the nominees were fairly fuzzy on the specifics of their tax plans. But now that things are getting down to the wire, they've had to really lay out how they propose to treat the American economy.

[Tweet “Tax policies are a hot topic every election cycle, but this one's enough to singe your eyebrows. “]

Tax policies are a hot topic every election cycle, but this one's enough to singe your eyebrows. Not only has every candidate in both parties proposed policies that would introduce big changes to our nation's existing tax code, but their proposals could not be more different from each other.

  • In general, the Republican party aims to drastically reduce the amount of revenue the federal government would collect. Their strategy is to boost economic growth and make U.S. companies more competitive, but this would also lead to a higher national deficit.
  • On the other side, the Democratic party is trying to raise the tax of higher-income earners/limit their deductions and use that money for things like expanded access to healthcare and college tuition subsidies. This could create a more equalized and fair economy, but it would also mean paying more tax on the front end.

It's All in the Details

Are we all breathing? Keeping cool heads?

Great. Now let's get to the nitty gritty of each party's nominee.

Democratic nominee Hillary Clinton:

General strategies 

  • Increase taxes on high-income filers
  • Reform international tax rules for corporations
  • Repeal fossil fuel tax incentives
  • Increase estate and gift taxes

Individual tax plan

  • Create a 4 percent “surcharge” on adjusted gross income over $5 million
  • Enact the “Buffett Rule,” which would require those making more than $1 million to pay at least 30 percent of their adjusted gross income in taxes
  • Limit the value of certain deductions (not charitable) and exemptions to 28%
  • Raise rates on medium-term capital gains to between 27.8 percent and 47.4 percent
  • Limit the total value of tax-deferred and tax-free retirement accounts
  • Tax carried interest as ordinary income
  • Increase estate tax from 40 percent to 45 percent
  • Expand current child tax credit
  • Tax credit to help families pay for elder care
  • Reform corporate tax to discourage avoidance
  • End fossil fuel subsidies
  • Offer tax credits for firms that train and hire apprentices and disabled veterans
  • Expand New Markets Tax Credit

Business tax plan

  • Eliminate the deductibility of reinsurance premiums paid by corporations to foreign subsidiaries and provides an exclusion from income for reinsurance recovered for any arrangement where the deduction was disallowed
  • Establish business tax credits for profit-sharing and apprenticeships
  • Enact a tax on high-frequency trading (at an unspecified rate)

Republican nominee Donald Trump:

General strategies

  • Significantly reduce all marginal tax rates
  • Increase standard deduction amounts to nearly 4x current levels
  • Limit or repeal tax expenditures
  • Repeal the individual and corporate AMTs
  • Repeal estate and gift taxes

Individual tax plan

  • Consolidate 7 tax brackets into 3: 33 percent, 25 percent and 12 percent (recently changed from 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
  • Taxes carried interest as ordinary income
  • Tax deduction for childcare (for those who file standard deduction)

Business tax plan

  • Lower the corporate income tax rate to 15 percent
  • Cap the tax rate on pass-through business income (sole proprietorships, S corporations, LLCs and partnerships) at 15 percent
  • End tax deferral on overseas corporate income
  • Allow businesses to immediately write off the costs of their investments
  • Allow businesses to repatriate their foreign earnings at a tax rate of 10 percent
  • Eliminate all other corporate tax expenditures
  • Eliminates corporate Alternative Minimum Tax
  • Cap the deductibility of interest expenses

Don't worry, Third Party stumpers. We've got your info too…though, honestly, it's a lot less fleshed out.

Whether that's because these nominees haven't figured out their fiscal policy details yet, or because the media simply isn't asking them as many questions, we'll leave it up to you to judge.

Gary Johnson (Libertarian Party)

  • Eliminate income tax and corporate tax and abolish the IRS, replacing all of it with one federal consumption tax
  • Enact a flat 23% tax (“Fair Tax”) on new goods and services for personal consumption
  • Issue a tax “prebate” for families to spend at their discretion on food/clothing/transportation/medical care
  • Abolish tax subsidies as well as double taxation on small businesses

Jill Stein (Green Party)

  • Impose a 90% tax on bonuses for bailed out bankers
  • Tax cuts for working families, the poor and middle class, and higher taxes for the richest Americans

Darrel Castle (Constitution Party)

  • Opposes all tax increases
  • Wants to apportion taxes based on states’ population (i.e., if a state represents 1% of the entire US population, it would be responsible for 1% of total US budget)
  • States would enact their own taxes to meet revenue requirements

Who's Your Best Match?

You know I love nothing more than a good tool. ISideWith.com has created a Presidential Tax Plan Calculator that uses the stated policies of each candidate to calculate how your taxes are likely to change under their administration. Check it out here and share it with your friends!

[Tweet “Wondering whose tax policies benefit you the most? ISideWith.com makes it easy to find out.”]

Who knows–your answers might surprise you. They may even help create some common ground between you and your friends who are voting differently.

The Bottom Line

Politics are always messy. Unfortunately, they're not going away any time soon. The main thing is to be informed and to be kind. Presidents and administrations will come and go, but your friendships are meant to last. Fight for them, not against them.

[Tweet “Presidents will come and go, but your friendships are meant to last. #TheBottomLine”]

P.S. Wondering where we got our facts?

P.P.S. Election platforms can change on a daily basis. (Especially this election, amirite?) We recommend checking in with ISideWith.org to get regular updates on the candidates' policies.