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A Comparison Of Candidates’ Tax Plans

Filed by KOSU News in Business.
February 9, 2012

From a flat tax to a “millionaires’ tax,” presidential candidates have put forth a variety of ideas for better steering the economy through changes to tax policies.

Overview

The Occupy Wall Street encampments have all but disappeared, but the issues raised by the movement’s rallying cry against inequality continue to have an impact on political discourse. Each of the 2012 presidential hopefuls have put forth his own plan to address the financial woes that continue to plague millions of Americans — but in very different ways.

President Obama has called on the wealthiest Americans to “pay their fair share of taxes” through the Buffett Rule, named after billionaire investor Warren Buffett, which would raise taxes for those making more than $1 million a year. Conversely, GOP contenders think that top earners should pay lower taxes so that they are free to invest in businesses that might then create jobs.

All of the Republican candidates have promised to extend the George W. Bush-era tax cuts on top earners, but some are proposing far more extreme changes to tax policy. Newt Gingrich has proposed an alternative flat tax rate of 15 percent that any taxpayer can opt for in order to cut back on the costs associated with filing taxes. Ron Paul has taken this notion even further by calling for the Internal Revenue Service to be shut down.

President Obama

Individual Taxes

End the Bush-era tax cuts for households that make more than $250,000 a year.

Implement the “Buffett Rule” which would ensure that taxpayers who make over $1 million a year pay a minimum effective tax rate of 30 percent.

Corporate Taxes

Lower the corporate tax rate from 35 percent to somewhere in the high 20 percent range.

Prevent U.S. companies from using overseas shelters for profits on intangible property such as royalties.

Provide a 20 percent tax break to companies that move operations back to the U.S.

Tighten regulations around “deferrals” of income earned abroad and impose a minimum tax on overseas profits.

Dividends And Corporate Gains

Require foreign tax credits from dividends paid to a parent company to be pooled.

Force private equity managers to pay the 35 percent standard tax rate instead of the 15 percent capital-gains tax rate on annual earnings from “carried interest.”

Impact

Tax revenue is projected to go up by about $1.6 trillion over 10 years, which includes $866 billion from the expiration of the George W. Bush-era tax cuts.

Source: CNBC; Reuters; barackobama.com

Newt Gingrich

Individual Taxes

Extend all 2001-2011 tax cuts that would otherwise expire in 2013.

Offer optional alternative tax system, which would create a 15 percent flat tax rate and allow taxpayers to claim a standard $12,000 exemption for each individual and dependent.

Unclear if taxpayers can switch back-and-forth between the “flat tax” option and the current tax.

Repeal the federal estate tax.

Corporate Taxes

Cut the corporate income tax rate from 35 percent to 12.5 percent.

Allow capital expenditures to be fully expensed.

Businesses would not be able to deduct the cost of employee benefits and interest payments.

Dividends And Capital Gains

Capital gains, dividends and interest income would not be taxable under the flat tax system.

Impact

Gingrich’s plan would reduce tax revenues by about $850 billion in 2015 compared with current law, a roughly 35 percent cut in projected revenue.

Source: Tax Policy Center; newt.org

Ron Paul

Individual Taxes

Extend all Bush-era tax cuts.

Eliminate the income tax without creating a replacement.

Eliminate all deductions and credits.

End taxes on personal savings.

Corporate Taxes

Cut the corporate income tax rate from 35 percent to 15 percent.

Allow U.S. companies to repatriate overseas profits without incurring additional taxes.

Dividends And Capital Gains

Exempt capital gains and dividends from taxes.

Impact:

Plans to cut spending by $1 trillion during his first year in office.

Would abolish several government agencies including the Internal Revenue Service.

Source: Tax Policy Center; Wall Street Journal; ronpaul.com; ronpaul2012.com

Mitt Romney

Individual Taxes

Permanently extend the 2001 and 2003 tax cuts that would otherwise expire in 2013.

Allow some provisions set by the 2009 stimulus act to expire, including the earned income tax credit.

Repeal the federal estate tax.

Corporate Taxes

Cut the corporate income tax rate from 35 percent to 25 percent.

Extend for one year the full expensing of capital expenditures.

Make the current research and experimentation credit permanent.

Allow a “tax holiday” for the repatriation of corporate profits from abroad.

Dividends And Capital Gains

Repeal the 3.8 percent tax on investment income of high-income individual taxpayers as well as the 0.9 percent tax on wages, both of which are scheduled to take effect in 2013 under the Affordable Care Act of 2010.

Impact

Three-fourths of taxpayers would see tax cuts of an average of more than $4,700 compared with current law.

Federal tax revenues would fall by an estimated $600 billion in 2015, a cut of about 16 percent.

Source: Tax Policy Center; mittromney.org

Rick Santorum

Individual Taxes

Permanently extend the 2001 and 2003 Bush-era tax cuts that would otherwise expire in 2013.

Collapse the current six tax brackets to two with 10 percent and 28 percent rates.

Triple the tax exemption for dependent children.

Repeal the federal estate tax.

Corporate Taxes

Repeal the 3.8 percent tax on investment income of high-income individual taxpayers as well as the 0.9 percent tax on wages, both of which are scheduled to take effect in 2013 under the Affordable Care Act of 2010.

Dividends And Capital Gains

Lower the tax on capital gains and dividends to 12 percent.

Impact

Taxes on average would be cut more than $9,700 for about 81 percent of taxpayers, while fewer than 0.5 percent would see their taxes increase an average of $175 compared with current law.

Tax revenues would fall by about $900 billion in 2015 compared with current law, a 40 percent cut.

Source: Tax Policy Center; ricksantorum.com [Copyright 2012 National Public Radio]

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