It is Election Season! Similar to Hunting Season, it is a special time when political candidates throw shots at each other. Especially exciting is when they start to spew out new tax law proposals, especially if they sound good, but no one has any idea what they are calling what.
Regardless, today I will try to help us poor voters by listing out, hopefully in simplified form, what each candidate for President of the United States has proposed for their tax law changes.
To be as neutral and fair as possible, I seriously did paper, rock, scissors with Hanna to see which candidate would go first. (By coincidence, one of us was wearing red and one of us was wearing blue.) (NOTE: what we wear has no indication as to how we lean politically.) And frankly, I am not sure going first or going last is a benefit in this case. But anyhow, Biden gets to go first today. Paper wins over Rock.
Summary of Joe Biden’s Proposed Tax Plans:
- Imposes a 12.4% Social Security Tax on folks that make over $400,000.
- Raises the 37% tax bracket to 39.6%.
- Raises the capital gains tax rate from 20% to 39.6% for incomes above $1,000,000.
- Removes the “step-up” in basis upon death.
- Limits itemized deductions for those that make over $400,000.
- Expands the Earned Income Tax Credit for childless workers over the age of 65.
- Expands the Child Care Credit maximum from $3,000 to $8,000.
- Increases the Child Tax Credit from $2,000 to $3,000.
- Reestablishes the First-Time Homebuyers Tax Credit.
- Increases the corporate tax rate from 21% to 28%.
- Establishes a Manufacturing Communities Tax Credit to reduce tax of businesses that experience workforce layoffs.
- Expands renewable-energy-related credits for carbon capture, use, and storage, residential energy efficiency, and Electric Vehicles.
- Ends tax subsidies for fossil fuels.
Summary of Donald Trump’s Proposed Tax Plans:
- Implements a 10% Tax Rate Cut for Middle Class Earners.
- Creates a “Made in America” Tax Credit. (For products made in USA and sold overseas)
- Expands Opportunity Zones to motivate companies to invest in economically distressed areas.
- Implements Tax Credits for companies that move their operations back to the USA from China, including 100% asset deduction.
- Forgives the Payroll Tax Deferral implemented last month.
- Implements permanent tax cuts to Payroll Taxes.
- Reduces the Capital Gains Tax from 20% to 15%.
Real summarized summary: Biden’s plan raises taxes on the rich and corporations while increasing tax credits for the poor. Trump’s plan gives tax breaks to everyone.