The two Democrat presidential candidates have proposed increasing income taxes. Fueling much of their concepts regarding federal levies is their belief that corporations and wealthy individual aren’t paying a fair share. The facts, however, indicate otherwise.
According to the Pew Research Center “ In 2014, people with adjusted gross income, or AGI, above $250,000 paid just over half (51.6%) of all individual income taxes, though they accounted for only 2.7% of all returns filed, according to our analysis of preliminary IRS data. Their average tax rate (total taxes paid divided by cumulative AGI) was 25.7%. By contrast, people with incomes of less than $50,000 accounted for 62.3% of all individual returns filed, but they paid just 5.7% of total taxes. Their average tax rate was 4.3%.”
What about corporations? According to KPMG corporations pay the highest taxes, at 40%. The global average is 23.87%. The western hemisphere average is 27.35%, the Europe average is 20.12%, and the Asian average is 22.59%.
The result of this is obvious. According to a National Review study “Almost 50 companies have chosen to ‘invert’ [move their domicile out of the U.S. for tax purposes] over the last ten years. More than in the previous 20 years.”
The exodus of companies out of the U.S. means less jobs, and less revenue.
According to the Americans for Tax Reform, Hillary Clinton has proposed $1 trillion in tax hikes:
“$350 Billion Income Tax Increase for a ‘New College Compact’ – Clinton has proposed a $350 billion income tax hike in the form of a 28 percent cap on itemized deductions.
“$275 Billion Business Tax Increase for “Infrastructure”—Clinton has called for a tax hike of at least $275 billion through undefined business tax reform. According to the Clinton campaign document, “Hillary will fully pay for these [Infrastructure] investments through business tax reform.”
“$400 Billion ‘Fairness’ Tax Increase — According to her published plan, Clinton has called for a tax increase of ‘between $400 and $500 billion’ by ‘restoring basic fairness to our tax code.’ These proposals include a ‘fair share surcharge,’ taxing carried interest capital gains as ordinary income, and raising the Death Tax.
“However, Clinton has also proposed several tax increases not included in the tally above. Because her campaign has failed to release specific details for many of her proposals, the true figure is likely much, much higher than $1 trillion. For instance:
“Capital Gains Tax Increase — Clinton has proposed an increase in the capital gains tax to counter the ‘tyranny of today’s earnings report.’ Her plan calls for an overly complex, byzantine capital gains tax regime with six brackets for those whose total taxable income puts them in the top 39.6 percent bracket. Her campaign has not said how much this will increase taxes.
‘would only further burden markets by discouraging trading and investment. Inevitably, costs associated with this new tax will be borne by millions of American families that hold 401(k)s, IRAs and other savings accounts.’
The Tax Foundation outlines Bernie Sander’s tax increase proposals:
“Individual Income Tax Changes
- Adds four new income tax brackets for high-income households, with rates of 37 percent, 43 percent, 48 percent, and 52 percent.
- Taxes capital gains and dividends at ordinary income rates for households with income over $250,000.
- Creates a new 2.2 percent “income-based [health care] premium paid by households.” This is equivalent to increasing all tax bracket rates by 2.2 percentage points, and would raise the top marginal income tax rate to 54.2 percent.
- Eliminates the alternative minimum tax.
- Eliminates the personal exemption phase-out (PEP) and the Pease limitation on itemized deductions.
- Limits the value of additional itemized deductions to 28 percent for households with income over $250,000.
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“Payroll Tax Changes
- Creates a new 6.2 percent employer-side payroll tax on all wages and salaries. This is referred to by the campaign as an “income-based health care premium paid by employers.”
- Creates a 0.2 percent employer-side payroll tax and 0.2 percent employee-side payroll tax, to fund a new family and medical leave trust fund.
- Applies the Social Security payroll tax to earnings over $250,000, a threshold which is not indexed for wage inflation.
“Business Income Tax Changes
- Eliminates several business tax provisions involving oil, gas, and coal companies.
- Ends the deferral of income from controlled foreign subsidiaries.
- Changes several international tax rules to curb corporate inversions and limit use of the foreign tax credit.
“Estate Tax Changes
- Decreases the estate tax exclusion from $5.4 million to $3.5 million.
- Raises the estate tax rate from 40 percent to a set of rates ranging between 45 percent and 65 percent.
- Changes several estate tax rules involving asset valuation, family trusts, gift taxes, and “
“Other Changes
- Creates a financial transactions tax on the value of stocks, bonds, derivatives, and other financial assets traded by U.S. persons. The rate of the tax ranges from 0.005 percent to 0.5 percent, depending on the type of asset.
- Limits like-kind exchanges of property to $1 million per taxpayer per year and prohibits the use of like-kind exchanges for art and collectibles.”
The Republican candidates have proposed cutting taxes.