Lets talk about everyone’s favorite topic: Taxation! With the 2016 election coming fast, let me explain what Clinton and Trump’s tax plans are and what it means for you.
As you can imagine, the two presidential plans are complete opposites – staying loyal to party lines. Trump’s plan focuses on tax cuts in the form of lowering tax rates whereas Clinton takes her plan right out of Bernie Sander’s book by vowing to raise taxes substantially on the super wealthy.
“I am proposing an across-the-board income tax reduction especially for middle-income Americans. This will lead to millions of new and really good-paying jobs. The rich will pay their fair share, but no one will pay so much that it destroys jobs or undermines our ability as a nation to compete.”
Donald Trump plans to create only three tax brackets to appeal to the middle class. The Top rate will be 33% (down from 39.6%); the next rate will be 25%; the last will be 12% (most Americans) and anyone earning under $29,000 will pay 0% tax rate. That’s right, the bottom earners will pay nothing! A surprising fact to most Trump haters. In fact, NPR recently posted a bias page saying, “much of the savings going to the wealthiest households”. Both candidates are jokes, don’t get me wrong – but it has turned into a game of “what can we get away with?”
Because she can’t steal anymore ideas from Bernie, Clinton has not yet expressed how she will help the middle class. But the jist of her plan is to tax the super wealthy as a way to fund subsidized college tuition and other programs. A good idea, but we defiantly need more details – but details are not her strong suit.
Clinton hopes to implement what Obama could not (she is taking other’s ideas again): the Buffet rule which would create a new tax bracket of 43.6% for taxpayers making over $5 million. The next would be 39.6%; 35%l and 33%. The middle class rates would be 28% for earnings over $91,150, 25% for earnings over $37,650, and 15% for earnings over $9275. Clinton also plans for a 0% rate for taxpayers earning $9,275. Another part of her plan I remember quite distinctly is an Exit Tax which aims to punish corporations that leave the U.S. This would be her way of justifying her high tax rates.
What does it all mean?
The big picture for Trumps plan is lower taxes for everyone. It focuses on promoting a healthier business environment to encourage hiring. Clinton’s plan is increasing taxes progressively to increase revenue and fund programs. The two plans are as difficult to compare as the candidates themselves – it is Trickle-down economics vs government programs.
The good part about Clinton’s plan is that it would add about $1.1 trillion in revenue over 10 years. The bad is that we still don’t know her whole plan and I find it difficult to trust that the added revenue would actually make it to the deficit. The good part about Trump’s plan is that taxes are cut across the board putting money in the pockets of Americans. But it would reduce the amount of taxes collected by $4.4 Trillion. But it is important to remember that taxes are not the only way to lower the deficit – Trump plans to cut spending and renegotiate trade deals (which is as unclear as Clinton’s government programs).
In both cases, there is still some uncertainty; but to sum it up: Trump will lower taxes – Clinton will raise them. It seems that Clinton’s plan will not effect the average American’s tax return directly – but we risk her spending to negate the revenue she will generate. In the end, it seems that Trump’s plan will most benefit the average American if he can cut spending. But stay tuned the the debate coming up on the 26th to see what they really have in store.