Tax proposals-same tax rate on income and capital gains

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Reference no: EM131107702

Review the candidates’ tax proposals:

Ordinary Income

Clinton: Adds a 4% surtax on income over $5 million

Sanders: Establishes four new brackets of 37%, 43%, 48%, and 52%. The top rate applies to taxable income over $10 million. Raises the rate of all other brackets by 2.2%.

Cruz: Establishes a flat rate of 10% on all ordinary income. Increases the standard deduction to $10,000 per filer.

Trump: Establishes four tax brackets, with rates of 0%, 10%, 20% and 25%. The top rate applies to income over $150,000 for single filers and $300,000 for joint filers.

Capital Gains and Dividends

Clinton: Adds a 4% surtax on income over $5 million. Raises rates on medium-term capital gains (investments held for less than six years) to between 24% and 39.6%.

Sanders: Taxes capital gains and dividends at ordinary income rates for households with incomes over $250,000.

Cruz: Lowers the rate on capital gains and dividends income to 10%.

Trump: Eliminates the net investment income surtax (applies to high incomes)

1. Which tax plan(s) is/are proportional taxes?

2. Which plans are the most progressive?

4. Which plans have the same tax rate on income and capital gains?

5. Discuss what principles underlie each plan?

Reference no: EM131107702

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