With the election for the 45th President of the United States only weeks away, tax policy seems to be the major issue on Americans’ minds. Depending on how the polls sway during the November 8 elections, your individual and business taxes for 2017 and beyond may be significantly different depending on who claims the White House as their new home.

Much of today’s tax policy is a carry-over from the early 2000s. George W. Bush’s administration phased in temporary, but significant income tax cuts and reduced taxes on investment income. Although President Obama attempted to end some of the Bush-era tax cuts in the late 2000s, opposition by Capitol Hill due to the economic downturn was overwhelming. As a result, the Obama administration indefinitely extended nearly all of the Bush tax cuts that were set to expire, and left cuts set to expire at the end of 2017 for the next president to deal with.

It is likely the next president will take up tax reform in a big way. Although, each major party candidate is proposing to alter our tax code, the approach taken by each candidate differs tremendously. Doeren Mayhew has compiled the proposed tax legislation of the two major party candidates, Hilary Clinton (Democrat) and Donald Trump (Republican).

Democrat – Clinton

Individual Income Tax

  • Retain current seven brackets
  • Impose 4% “Fair-Share Surcharge” on individuals with income over $5 million resulting in top rate of 43.6%
  • Implement Buffet Rule: Minimum 30% rate on those earning $1 million or more
  • Presumably retain current 0.9% Medicare Hospital Insurance tax on high-income taxpayers
  • Raise capital gains rates for short-term trading for top two income tax brackets: Top capital gain rate would be 39.6% for assets held 2 years or less and gradually reduce it to 20% for assets greater than 6 years
  • Presumably retain current law of  3.8% net investment income tax
  • Tax carried interest as ordinary income with maximum rate of 43.6%
  • No proposal to change current law related to standard deduction or exemptions
  • Introduce new caregiver credit of up to $1,200
  • Expand child tax credit to limit child care costs to 10% of family income
  • Cap tax value of most itemized deductions at 28% for wealthier individuals (except for charitable giving)
  • Create a 45% top rate and $3.5 million exemption per spouse for estate and gift taxes

Corporate/Business Income Tax

  • Maintain current corporate tax rate cap at 35%
  • No changes specified for pass-through entity rates other than new top rate of 43.6% on income over $5 million
  • Immediate expensing of up to $1 million in new small business investment
  • Proposed Manufacturing Renaissance Tax Credit
  • Allow cash accounting for businesses with gross receipts of less than $25 million and “checkbook” accounting for those under $1 million
  • Provide “support for companies that move jobs and production back to the U.S. from abroad”

Affordable Care Act

  • Supports Affordable Care Act , but would repeal Cadillac Tax

Republican – Trump

Individual Income Tax

  • Collapse the current seven tax brackets into three brackets of 12%, 25% and 33%
  • Repeal 0.9% Medicare hospital insurance tax
  • Repeal 3.8% net investment income tax
  • Dividends and capital gains will retain the top rate of 20%
  • Tax carried interest will be taxed at ordinary income with maximum rate of 33%
  • Increase standard deductions $15,000 for single filers and $30,000 for joint filers
  • Cap itemized deductions at $200,000 for married/joint filers or $100,000 for single filers
  • Repeal death tax, but capital gains held until death will be subject to tax, with the first $20 million tax-free
  • Allow taxpayers (income under $500,000 for married/joint and $250,000 for single) to take an above-the-line deduction on child care expenses for up to four children and elderly dependents. Deduction will be capped at the average cost of care for the state of residence
  • Offer child care spending rebates equal to 7.65% of remaining eligible child care expenses to lower-income taxpayers through the existing Earned Income Tax Credit
  • Repeal federal estate and gift taxes

Corporate/Business Income Tax

  • Reduce the maximum corporate tax rate to 15%
  • Limit the top individual income tax rate on pass-through businesses to no more than 15%
  • Manufacturers engaged in the United States may elect to expense capital investment and lose the deductibility of corporate interest expense. An election can only be revoked within the first 3 years of the election
  • Eliminate most corporate tax expenditures, except R&D
  • Repeal corporate alternative minimum tax
  • Increase annual cap on business tax credit for on-site child care to $500,000 per year with a recapture period of only 5 years
  • Impose up to a 10% deemed repatriation tax on the accumulated profits of foreign subsidiaries of U.S. entities

Affordable Care Act

  • Repeal the act

Positions of candidates may change between publication date and election date. Doeren Mayhew has composed this article with nonpartisan and unbiased information.