By Frank Vernuccio
Originally posted in the New York Analysis of Policy & Government newsletter
Both Donald Trump and Hillary Clinton have released the outlines of their tax proposals. The general thrust of their policy choices reflects the underlying core beliefs of their supporters.
Republicans believe that a vibrant private sector is the key to reviving a moribund economy that, over the past eight years, has devastated the middle class, produced barely any growth in America’s gross domestic product, and caused recesionary levels of real unemployment and labor participation rates.
That concept is addressed by the Trump campaign’s focus on reducing taxes to allow the economy to revive. Republicans point to the success acheived by President Reagan who took over the White House during a time of deep economic crisis, and revived the nation with a low tax, high growth approach. The GOP cites America’s exceptionally high business taxes as a reason why jobs are not being created, and why middle class families are struggling.
Democrats maintain their faith in large government programs. They seek to gain greater revenue to finance additional efforts such as free college tuition, Obamacare, and President Obama’s 41% increase in spending on the Supplemental Nutrition Assistance Program. Particularly targeted for tax hikes are those considered wealthy and American corporations that do business across the world.
It is in the area of business taxes that the two ideologies contend most sharply. Republicans point to America’s corporate taxes, which significantly exceed rates found among almost all other developed nations, as a reason that middle-class jobs are leaving the U.S.. They seek to lower taxes to stop and reverse that process. Democrats seek to impose tax penalties and regulatory restrictions on U.S. companies doing increased business across the globe as a means of discouraging offshoring employment.
The New York Analysis of Policy and Government has reviewed the tax policy outlines provided by both the Clinton and Trump campaign
- Implement a “fair share surcharge” on multi-millionaires and billionaires and fight for measures like the Buffett Rule to ensure the wealthiest Americans do not pay a lower tax rate than hardworking middle-class families.
- Close loopholes that create a private tax system for the most fortunate.
- Insure multi-million-dollar estates are paying their fair share of taxes.
- Close tax loopholes like inversions that reward companies for shifting profits and jobs overseas.
- Charge an “exit tax” for companies leaving the U.S. to settle up on their untaxed foreign earnings. She will close tax loopholes that let Wall Street money managers pay lower rates than some middle-class families. And she’ll reward businesses that invest in good-paying jobs here in the United States.
- Simplify and cut taxes for businesses with only one to five employees.
- Offer relief to working families from rising costs, including tax relief for Americans facing excessive out-of-pocket health care costs and for those caring for an ill or elderly family member.
- Reduce taxes for everyone, and provide an across-the-board income tax reduction, especially for middle-income Americans.
- Eliminate the Carried Interest Deduction and other special interest loopholes.
- Provide tax simplification. Reduce the current number of brackets from 7 to 3, and streamline the process. Reduce tax brackets to: 12, 25, and 33 percent.
- No American company will pay more than 15% of their business income in taxes, emphasizing tax breaks for small businesses.
- Allow businesses to immediately expense new business investments.
- Make childcare a 100% tax-deductible expense. Allow parents to fully deduct the average cost of childcare spending from their taxes.
- Bring back American businesses funds currently now parked overseas, applying a 10 percent tax.
- Repeal the death tax.