So far, it’s been quite an interesting journey among the 2016 presidential candidates. With different proposals and ideas, tax professionals may have a pretty solid understanding of each proposal, but all Americans should understand how each reform differs and how it can affect them. With 2016 being an election year the candidate’s tax proposals are extremely important. Let’s take a brief look at the remaining candidate’s tax reform main ideas for individual income tax that can help educate you while you make your next decision.
Income Taxes for Individuals
Let’s first state that by changing the current tax brackets, individual income tax is altered. If we look at what we, the United States already has established, we currently have seven tax brackets for individual income. They are 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.
Hilary Clinton: For high-income taxpayers with taxable income over $5 million, she proposes a 4% surcharge. Her plan aims to increase tax revenue by $498 billion over the next decade on a fixed basis.
Bernie Sanders: The Senator is proposing adding four new income tax brackets being 37%, 47%, 48%, and 52%. These added tax brackets raise individual income taxes and raise taxes heavily on high-income taxpayers with income over 250,000. His proposal would raise tax revenue by $13.6 trillion over the next decade on a fixed basis. The raised rate of the income tax is 2.2%.
Donald Trump: Trump’s proposal for individual income tax is to merge the current seven tax brackets to 0%, 10%, 20% and 25%, with low income individuals making below $25,000 and families making under $50,000 paying a rate of 0% and higher margin income households of $150,000 for single filers and $300,000 for joint filers at a rate of 25%. His proposal lowers individual taxes that predict a tax cut of 11.98 trillion over the next decade on a fixed basis.
Ted Cruz: Senator Cruz proposes a tax plan that calls for merging the seven tax brackets to solely one at a flat rate of 10% on all personal income. This means that the standard deduction per filer is increased to $10,000 from 6,300. At this rate, his plan would cut taxes by $3.6 trillion over the next decade on a fixed basis.
Marco Rubio: Senator Marco Rubio aims to condense the current seven tax brackets down to three brackets of 15%, 25%, and 35%. The top rate applies to both corporate and non-corporate business income. His plan also includes implementing a new child tax credit of 2,500 to compensate for the cost of raising a child. His proposal predicts an increase in economy by 1.44 percent over the next decade.
John Kasich: Kasich’s plan on individual tax aims to decrease the seven tax brackets to three, the highest rate being 28% from the current 39.6% top rate. The action calls to lower the income tax rate to help increase the Earned Income Tax Credit by 10%.
As of March 3rd, 2016, the remaining candidates listed above continue to spread their vision for tax reform in America. Taxpayers should remain knowledgeable in the candidate’s proposals, and what can potentially be the future for the united states. Tax issues are not new in the United States, though by following proper guidelines, Tax Solutions is eager to assist. Call us for information on your recent tax returns or discuss your matters here.