Trump and Clinton’s Tax Plans: How They Stack Up and What It Means To You

Nick HopkinsBy Nick Hopkins, CPA, CFP®
Partner, Director of Tax Services

With the presidential election coming down to the wire, now is a good time for a nonpartisan look at the tax proposals of the two major party candidates to see what they would mean for individuals and businesses under a Hillary Clinton or Donald Trump administration.

Never have two candidates for president had such dramatically different visions for American tax policy. Trump wants to cut taxes across the board, while Clinton favors raising rates and limiting deductions for high-income taxpayers.  The following is a brief synopsis of each candidate’s proposals:

Trump’s Plan

Trump would lower the top marginal tax rate (currently 39.6%) and condense the seven individual federal tax brackets to three at 12%, 25% and 33%. He also has proposed doing away with the alternative minimum tax, estate taxes, and taxes on investment income and gifts. He would lower the corporate tax rate from 35% to 15% and eliminate the corporate alternative minimum tax.  He would, however, also eliminate most corporate tax expenditures except for the research and development credit.  Trump’s proposal would not alter payroll taxes for Social Security and Medicare.

The elimination of the estate tax would save some families millions in transferring a business or property, and eliminate the need for most estate tax planning. But it would also cost the government billions in revenues.

According to the Tax Foundation, Trump’s plan “would reduce federal revenue by between $4.4 trillion and $5.9 trillion on a static basis.”  His plan would most likely incentivize people to work, save and invest more. But unless accompanied by drastic spending cuts, the national debt would likely skyrocket.

While tax planning would be streamlined, especially for high net-worth individuals, pass-through income could get more complicated under Trump’s policies. If Congress also decides to enact broad-based corporate tax reform and small business taxation, it could prove a boon to those who want to shield business income.

For a more detailed look at Trump’s tax plan, click here.

Clinton’s Plan

Clinton would raise rates and limit deductions for high-income taxpayers in order to pay for a raft of new federal spending, including new infrastructure and free public college tuition for families earning under $125,000.

Clinton would introduce a 4% “fair share” surtax on all income above $5 million, which would result in a top marginal rate of 43.6%. For those making more than $1 million a year, a minimum effective tax rate of 30% would be established – the so-called “Buffett Rule.”  She would also adjust the schedule for capital gains by raising rates on medium-term capital gains (1 – 6 years) which would be taxed at a rate between 20% and 39.6%.

Itemized deductions would be capped at a tax value of no more than 28%, which would make mortgage interest and tax deductions less valuable for higher-bracket individuals. Estate taxes would restore the 45% rate with an exemption up to $3.5 million for most estates.  Her plan will go further than that for estates valued in the tens and hundreds of millions, with higher rates as values rise, up to a 65% rate on estates valued at over $1 billion per couple.  In addition, gifting would be limited to a lifetime exemption of $1 million.

Low- and middle-income families would benefit most from Clinton’s tax proposals. Under a Clinton administration, it may make more sense to pay down or pay off mortgages, since many high-income households would not be able to deduct as much on them.

On Social Security and Medicare, Clinton would raise the current earnings cap of $118,500, meaning higher-income workers would pay a greater portion of their salaries.

The Tax Foundation’s analysis says Clinton’s plan would raise federal revenues by $191 billion over the next 10 years after accounting for expected decreases in economic output, which the Tax Foundation model predicts will lower GDP by 1%. This would result in projected after-tax income of all taxpayers falling by 0.9%.

For more details on Clinton’s tax plan, click here.

Whether Trump or Clinton wins the election, it is highly unlikely all of their tax proposals will be adopted by whatever Congress is installed in 2017. But their published plans give a good grasp of the candidates’ thinking.

If you have any tax-related questions or concerns, please call Nick Hopkins at (317) 608-6695 or email

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