Presidential Candidates & Taxes: Their Plans vs. Your PayPublished:
A Look at the Presidential Candidates’ Tax Proposals & Your Take Home Pay
Tax season might be over, but that doesn’t mean it’s time to stop thinking about taxes. In fact, we’ll hear about it for the rest of the year while presidential candidates try to convince us that their tax plans are better for us than their competitors’.
How do the candidates’ tax plans affect you? Depending on which candidate wins, starting as soon as next year you could see a sizeable difference in your take home pay! Considering the vast majority of Americans live paycheck to paycheck, $100 or more either way could mean getting ahead of bills and debt — or falling further behind.
If you’re not familiar with each candidate’s tax plan we’ve provided a quick summary below, along with some examples based on different income levels to help guide you.
Candidates’ Income Tax Proposal Summaries
Hillary Clinton wants to add a 4 percent surtax on any income over $5 million, as well as raise rates on medium-term capital gains (investments held less than six years). Both of these proposals pretty much only affect people with a lot of money, so the average American won’t see much change.
Donald Trump wants to whittle the current number of tax brackets down to four, with the highest bracket at 25 percent for people who earn $150,000 or more. This would likely reduce the amount of income tax most people pay, but it would also require cuts in services and spending. The real estate mogul also wants to get rid of a relatively new investment income tax, which unsurprisingly affects real estate deals and doesn’t apply to the average American.
Dropped Out Of The Race
Bernie Sanders had the most aggressive tax plan, establishing new brackets for the highest-income individuals and increasing tax rates on all existing brackets. Basically, anyone who “feels the Bern” would have felt it in their wallet.
Ted Cruz planned to implement a flat income tax of 10 percent for both regular income and capital gains. Since the average federal tax rate is greater than 10 percent, most Americans would have likely seen reduced taxes. However, the benefits would not have worked out equally – the highest earners currently sit in the 39.6% bracket, which means they would get a huge break while some of the lowest earners (those who pay no taxes or have a negative effective rate) would see their taxes increase.
John Kasich proposed reducing the number of tax brackets with the highest being 28 percent, and lower long-term capital gains tax to 15 percent for all brackets. While his plan would reduce taxes for those with higher incomes, it probably would have had the smallest impact across the board and is closest to our current tax structure.