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CLINTON VS TRUMP ON PROPOSED TAX POLICY

Election Day will be here before you know it. Both presidential hopefuls Donald Trump and Hillary Clinton have already disclosed some major changes they would like to make to our current tax system including tax brackets, estate tax and investment income.

The current tax code puts individual taxpayers into one of seven brackets, wherein tax rates range from 10% to 39.6%. Trump is looking to establish four brackets with rates of 0%, 10%, 20% and 25%. The top rate would apply to $150,000 single ($300,000 joint filer). Clinton is looking to add a 4% surtax to filers with adjusted gross income (AGI) above $5,000,000 while keeping the current tax rates the same.

Currently the estate tax has a $5.45 million per person exemption (indexed for inflation) which affects just .2% of estates. Clinton's plan is to reduce this exemption to $3.5 million (not indexed for inflation) and increase the tax rate from 40% to 45%. This would affect .4% of estates now and possibly more in the future as inflation rises. Trump's proposed plan is to eliminate the estate tax altogether.

Short-term capital gains are currently defined as realized gains on investments held less than one year and are taxed as ordinary income. Gains on investments held longer than a year are taxed at either a 0%, 15% or 20% rate depending on which marginal tax bracket you fall into. Clinton is looking at extending the short term holding period from one to two years in which ordinary tax rates apply. In addition, investments held between two and six years would have tax rates ranging from 24% to 39.6%. After six years, the 20% tax bracket would apply. Trump is looking at elimination of the net investment income tax that has a current rate of 3.8% while leaving the capital gain structure intact.

Keep in mind that any actual changes to the tax code will have to go through Congress before it can be enacted.

US NATIONAL DEBT

As of Weds., July 20 8:51AM EST: $19,355,123,302,799

FEDERAL INTEREST RATES

Prime 3.5%

Federal Funds 0.40%

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Published by UHY LLP News.

Our firm provides the information in this newsletter as tax information and general business or economic information or analysis for educational purposes, and none of the information contained herein is intended to serve as a solicitation of any service or product. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

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