Summary of Hillary Clinton’s Tax Proposal
Hillary Clinton’s tax proposal would raise taxes on the highest income individuals, repeal fossil fuel incentives, increase estate and gift taxes and create tax disincentives for corporations to shelter income overseas for tax avoidance purposes. Over the next 10 years, she would increase federal revenues by $1.1 trillion. Her proposals would decrease the federal debt by $1.2 trillion over the next decade and by $4.3 billion over the next 20 years.
Her individual income tax proposals include: 1) a 4% surcharge on adjusted gross income over $5 million, 2) a 28% limit on deductions (other than charitable deductions), and 3) the fair share 30% rule or Buffet rule on adjusted gross incomes over $1 million annually. She also proposes changes to capital gains so that they are taxed as ordinary income if the investments are held for a short time and as capital gains (a much lower rate) if they are held for a longer time frame. She also proposes to tax the earnings of hedge fund partners as ordinary income rather than at the lower capital gains rate. She would also cap at $3.4 million the tax free IRA accumulations. These would raise taxes by $781 billion over 10 years.
Her business tax proposals are aimed at: 1) corporations who seek to dodge American taxes by locating their home offices overseas, 2) high frequency trading excess, 3) excessive risks of the largest financial institutions, and 4) fossil fuel subsidies like the oil depletion allowance. These would raise $136 billion over 10 years.
She would reduce the estate tax exclusion from $5.4 million to $3.5 million (twice that for couples) and increase the top tax rate on large estates to 45%. These would raise $160 billion over 10 years.
Individuals with incomes below the 95th% percentile ($296,000) would see little if any change in their taxes. Individuals with income between the 95th% and the 99th% ($296,000 to $732,000) would see an average increase of 0.6% ($2,673). Individuals in the top 0.1% (over $3,769,000) would see an average increase of 5% ($520,000) in their federal taxes.
The funds raised by the Clinton proposal could be used to pay down the national debt or to fund needed infrastructure improvements in America. Either approach, depending on design, could improve the nation’s economic performance.
Basically, she is closing loopholes that the top 1% of individuals such as hedge fund managers and others have used to avoid paying income taxes at the same rate as the rest of the population. She is also closing loopholes that corporations have been using to park their earnings overseas and avoid taxation at American corporate tax rates.
Prepared by Lucien Wulsin
Date: June 24, 20q6