Tax Reform Proposals from the major 2016 Presidential Candidates
During any presidential campaign cycle, wild promises and proposals are drafted and tested for the public consumption. While many of these never go anywhere or break through the gridlock in Washington, it is important to know where candidates stand.
The following list includes the tax reform proposals from the major candidates and will be updated as the campaign continues.
Hillary Clinton -
According to HillaryClinton.com, "we will provide tax relief to help those families keep up with the rising costs of child care, education, and health care. After decades of stagnant wages, Americans need a break."
Hillary calls herself the "president for small business" and promises to simplify the tax filing requirements for businesses with 1-5 employees. No details were available on how her administration would change things.
The one detail that has been floated around is that tax rates will be increased for the 1% and an increase of the capital gains tax rate. Under Mrs. Clinton's capital gains tax proposal, for individuals in the top income bracket, the tax rate will start at 39.6% for investments that taxpayers hold for two years or less, then start decreasing to the 20% rate for assets held for more than six years. Taxpayers below the top tax rate levels (approximately $465,000 for married tax filers) would see no change.
Critics of Mrs. Clinton's capital gains proposal counter that her views will throttle investment and business growth.
Donald Trump -
Mr. Trump's campaign slogan is "make America great again!" His campaign website is short on details on how he plans to accomplish this. Many of his tax reform ideas come from his speeches, his 2000 campaign, and editorial content.
Previous ideas that were floated included:
1) Elimination of the estate tax
2) A one-time 14.25% tax on assets of every American or trust on assets over $10 million.
3) Five-Part Tax Plan -
• Up to $30,000 of taxable income: 1%
• From $30,000 to $100,000: 5%
• From $100,000 to $1 million: 10%
• On $1 million or above: 15%
Trump has not specified a new tax plan in the run-up to his 2016 candidacy. Stay tuned for more details.
8/14/2015 Update: In a recent interview on Fox News Channel with “Hannity”, Mr. Trump stated that he is against a flat tax and “people as they make more and more money can pay a higher percentage”.
Jeb Bush -
In 2012, Mr. Bush stated that he would accept a fiscal deal that included $1 in tax increases for every $10 in spending cuts. This controversial position ran counter to Republican thinking at the time.
As governor of Florida, Mr. Bush cut taxes by more than $19 billion. As a candidate for president in 2016, Mr. Bush has come under fire for not signing the Americans for Tax Reform anti-tax pledge.
His campaign website does not share any insight on his current tax reform concepts. Much of what is known is found in his actions as governor of Florida and press clippings. His long-term record can be found at www.ontheissues.com.
In a speech launching his 2016 campaign, Mr. Bush alluded to the massive tax increase on the middle class brought on by the Obama administration. Pundits will argue that this is simply not true. Regardless, more details should be coming throughout the campaign on Mr. Bush's tax policies and how they may shape economic growth.
9/09/2015 Update: Republican candidate lays out plan to streamline seven tax brackets to three, with a top rate of 28%, down from 39.6%
Bernie Sanders -
Mr. Sanders's website calls the US economic system a rigged system that needs reform. "One family, Walmart's Walton family, owns more wealth than the bottom 42 percent of Americans combined."
When it comes to taxes, Mr. Sanders proposes a progressive tax system based on the ability to pay.
His proposals vary, but below are some of the main points:
• Double the capital gains tax for the wealthiest 2%.
• Keep the progressive tax system but make it based on the ability to pay.
• Target offshore tax havens.
• Increase the top estate tax rate to 65%.
• Introduce a financial transaction tax.
• Increase the top tax bracket rate to 90%.
Ben Carson -
"Low-income taxpayers can--and want--to pay taxes," Ben Carson was quoted as saying in May 2015. "If you eliminate the loopholes and the deductions, then you're really talking about a rate between 10 and 15 percent."
Mr. Carson believes a flat-tax system will streamline the tax collection system and bring more people into compliance.
Per BenCarson.com, creating a fairer, simpler, and more equitable tax system will enable taxpayers to complete a tax form in 15 minutes, helping to end the IRS as we know it.
As of now, more details have not been "fleshed out." Whether that includes a $25,000 per person exemption or other ideas, time will tell.
Chris Christie -
Chris Christie's slogan "telling it like it is" is backed up by his display of the position of issues on his campaign website. When it comes to his tax reform policies, Mr. Christie proposes "pro-growth tax reform."
Per his website, "Governor Christie will reform the tax code by creating a flatter, fairer and simpler individual income tax system and keep returns simple by reducing deductions and giveaways."
One specific Mr. Christie mentions is lowering the corporate tax rate to 25%, which according to the S&P will generate as many as 10 million jobs. In a speech in May 2015, Mr. Christie proposed cutting the top tax rate to 28%, among other proposals listed below:
• Have three tax brackets for individuals, down from the current seven. The bottom tax rate, Christie said, should be in the single digits.
• Cap the amount of credits and deductions taxpayers can take.
• Keep the deduction for charitable contributions and home mortgage interest.
Ted Cruz -
Mr. Cruz authored the Obamacare Repeal Act as one of his first pieces of legislation. He also authored legislation to end taxpayer funding of the Export-Import Bank. In an interview with the Washington Examiner, Mr. Cruz explained how "abolishing the IRS" fits into his tax reform proposals.
Mr. Cruz added, "I am campaigning on a flat tax that would allow every American to fill out his or her taxes on a post card that allow us to abolish the IRS."
More specifically, Mr. Cruz has proposed the following:
• Adopt a single rate flat tax.
• Eliminate the estate tax.
• Abolish the IRS.
Mike Huckabee -
Mr. Huckabee has a very detailed stance on his issues on a variety of topics, including tax reform (http://www.mikehuckabee.com/tax-reform), on his campaign website. He is a proponent of abolishing the IRS and changing over to FairTax.
Mr. Huckabee proposes the following:
• Under the FairTax system, every person living in the United States pays a 23% sales tax on purchases of new goods and services.
• Remove payroll taxes.
• Abolish the IRS.
Rand Paul -
When you visit RandPaul.com, you are greeted with "How would you kill the tax code?" So it's not hard to figure out his #1 position: tax reform. His campaign website devotes a video in which Mr. Paul details "an over $2 trillion tax cut that would repeal the entire IRS tax code--more than 70,000 pages--and replace it with a low, broad-based tax of 14.5% on individuals and businesses."
Highlights of Rand Paul's "The Fair and Flat Tax."
• Eliminates the payroll tax on workers and several federal taxes outright, including gift and estate taxes, telephone taxes, and all duties and tariffs.
• "Blow up the tax code and start over."
• Establish a 14.5% flat-rate tax applied equally to all personal income, including wages, salaries, dividends, capital gains, rents, and interest.
• Exclude the first $50,000 of income from taxes for a family of four.
• Apply a uniform 14.5% business-activity tax on all companies.
Update 9/16/2015: To make a point, Rand Paul shot an assault rifle through the 80,000 pages of IRS tax code.
Scott Walker -
Per ScottWalker.com, Mr. Walker "remains committed to reducing the tax burden for hardworking taxpayers, streamlining government, and advancing reforms that will provide more opportunity and prosperity for all."
"I came of age during Reagan, and this should shock no one that my views of the world are largely shaped by President Reagan," the 47-year-old governor said during a recent interview.
"I look back at where the tax rates were under Reagan and say, 'Boy I think that's a pretty good role model,'" Mr. Walker said.
Much of his record on tax reform can be found through his policies in Wisconsin.
• He reduced Wisconsin property taxes by $141 in 4 years.
• Tax increases reduce state revenues in long run.
• Higher tax rates and low unemployment are not a coincidence.
• He signed and supports a Taxpayer Protection Pledge.
Marco Rubio -
Before you get into Mr. Rubio's tax policy, his main pitch is "dramatically downsizing" the IRS and simplifying the tax code. Mr. Rubio does have a robust section on his campaign website where he highlights his position on the issues. In an article originally published in the Wall Street Journal, Mr. Rubio highlights his "pro-growth tax reform policy."
His policy highlights:
• Consolidate the many existing income tax brackets into two simple brackets--15% and 35%.
• Eliminate or reform deductions, especially those that disproportionately benefit the privileged few at everyone else's expense.
• Eliminate the well-known marriage penalty, which imposes higher taxes on married couples than if they had filed individually.
• Augment the current child tax credit of $1,000 with an additional $2,500 credit, applicable against income taxes and payroll taxes.
• Cut the current 35% corporate tax rate to make it competitive in the global economy.
• Allow companies large and small to deduct their expenses and capital investments while integrating all forms of business taxation into a consolidated, single-layer tax.
• Eliminate double-taxation on investment. As new candidates jump into the fray or we learn more tax reform details from candidates, we will update this blog article with the latest proposals.
Carly Fiorina -
Since the first Presidential debate Ms. Fiorina has seen a bump in her approval numbers. A visit to Ms. Fiorina campaign website will show very few policy details.
Ms. Fiorina did however say the following on a FaceBook post dated April 15, 2015. "Our current tax system is in desperate need of reform. The complexity and lack of transparency only benefits the powerful and connected while crushing small businesses and innovation. The result is crony capitalism--because only big businesses can handle big government.
The worst part is that right now Washington doesn't even know where all your tax dollars are going. They have no idea because they never examine any budget from top to bottom – and haven't for decades. It's time to move to zero-based budgeting and simplify the tax code. You deserve to understand where your money is going. You deserve to have a tax code that is transparent and fair so that everyone--whether you work for a small business or just want to keep a little more of your own money-- has the opportunity to compete and thrive."
Some insight into Carly's beliefs about tax complexity may come from the fact that Mr. and Ms. Fiorina had to file taxes in no fewer than 17 states in 2013.