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Donald Trump vs. Hillary Clinton: How Will You Be Taxed?

How far will Washington dig into your pockets? We compare what your taxes might look like under the Republican and Democratic nominees.

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To perhaps my everlasting shame, I watched the second televised debate between Donald Trump and Hillary Clinton. And the entire time, it seemed surreal to me that one of these truly unlikable people is going to be the next leader of the free world.

While we might dream that the Electoral College will somehow throw the rule book out the window and elect someone — anyone — else, one of these two will be the next president. And that means that we’re very likely to see some changes to the tax code.

Let’s take a look at the tax code changes proposed by both candidates and see what they might mean for ordinary investors.

I’m going strip out ideology and keep this pretty matter-of-fact. I’ll also ignore for now the potential impact on the budget deficit and national debt. Sadly, those are issues our children will be forced to deal with. For today, we’ll focus only on the immediate impact on our take-home pay. All data here comes from the respective candidates’ campaign websites.

Donald Trump’s Tax Plan

I’ll start with Donald Trump’s tax plan.

In a lot of ways, it looks like typical Republican orthodoxy of lower and simpler taxes, and Trump’s plan actually overlaps quite a bit with Republican proposals in the House of Representatives.

Trump would reduce the number of tax brackets to just three, down from the seven we have today. On income up to $75,000, American households would pay 12% in federal taxes. On income over $75,000 but less than $225,000, the rate bumps up to 25%. And on income over $225,000 the rate would be 33%. (Single taxpayers would be taxed at half those amounts.)

Trump would leave the capital gains tax unchanged and would eliminate the estate tax … but with a twist. Larger estates would not get the capital gains step-up. So while heirs would not have to pay taxes on the value of the assets inherited, they might be on the hook for capital gains.

Trump’s plan would also eliminate the carried interest provisions that allow hedge fund managers to pay lower capital gains rates rather than higher ordinary income rates. And he would lower the corporate tax rate to 15%.

Hillary Clinton’s Tax Plan

Hillary Clinton’s plan is also standard party orthodoxy for a Democrat. It is more focused on wealthier taxpayers paying a larger share and makes few specific comments about taxes paid by middle- and working-class taxpayers. She makes no specific mention of the basic tax brackets and would, presumably, leave them unchanged.

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Article printed from InvestorPlace Media, http://investorplace.com/2016/10/donald-trump-vs-hillary-clinton-tax-plans/.

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