Policy Prescriptions: Clinton and Trump on taxes
WASHINGTON (AP) — One group of Americans will likely see huge changes to their tax bills after this year's presidential election: the wealthiest 1 percent.
"In almost every meaningful respect these plans are mirror images," said Len Burman, a former Treasury official under President Bill Clinton who is director of the Tax Policy Center, a joint project between two nonpartisan Washington think tanks.
Would cut the top income tax bracket to 33 percent from its current level of 39.6 percent and would cap tax deductions at $200,000 per household.
On average, middle-income households would receive a tax cut of $1,010, lifting their after-tax income 1.8 percent, the TPC says.
Managers for private equity firms and hedge funds can classify their investment profits as "carried interest" and pay capital gains taxes on their income at rates that can be as low as half the regular income tax rate.
Trump says he would eliminate the loophole, but hedge fund and private equity managers would be able to pay even lower tax rates should Trump let pass-throughs enjoy his lower 15 percent business tax rate.
Argues his steep cut in the corporate tax rate would end the practice of corporate "inversions," which occur when a U.S. company acquires a foreign corporation, then relocates overseas to avoid paying U.S. corporate taxes.
The U.S. corporate tax rate of 35 percent is the highest in the developed world, though many companies use deductions and other strategies to avoid paying that amount.
Wants to make child care costs tax-deductible, subject to caps based on income and the average price of child care in a state.
Would expand the Earned Income Tax Credit to benefit lower-income earners who pay little or no income tax.
Wants to limit child care expenses to 10 percent of a family's income through a combination of expanded government spending and tax credits.
EDITOR'S NOTE _ One in an AP series examining the policy prescriptions offered by the major candidates for president.