As previously discussed in this blog about the differences between Senator Bernie Sanders and Senator Ted Cruz’s tax plans (graduated plan with increase taxes on the rich vs. flat tax), in the recent news, Republican frontrunner and presumptive nominee Donald Trump recently announced that he is willing to backtrack on his proposal to cut taxes for the rich while also cutting taxes for the middle class. See this MSN article.
Last fall, Donald Trump initially announced his tax plan. See this MSN article. His original plan would significantly reduce marginal tax rates on individuals and businesses, increase standard deduction amounts to nearly four times current levels, and curtail many tax expenditures. See Tax Policy Center’s analysis of the Trump tax plan.
A closer look at the original proposed Trump Plan shows that the bulk of the tax cuts would be to rich and wealthy. As stated by Tax Policy Center, “The highest-income 0.1 percent of taxpayers (those with incomes over $3.7 million in 2015 dollars) would experience an average tax cut of more than $1.3 million in 2017, nearly 19 percent of after-tax income.” Meanwhile the Trump plan proposed only a modest tax cut for the middle class: “Middle-income households would receive an average tax cut of $2,700, or 4.9 percent of after-tax income.” See Tax Policy Center’s analysis of the Trump tax plan.
In contract to Trump’s proposed tax plan is Senator Hillary Clinton’s tax proposal. See Senator Clinton’s website, or the Tax Policy Center’s Analysis. According to the Tax Policy Center, Senator Clinton’s plan would, “increase taxes on high-income filers, reform international tax rules for corporations, repeal fossil fuel tax incentives, and increase estate and gift taxes.” Senator Clinton’s proposals would have the following estimated effects for 2017: In 2017, “taxpayers in the top 1 percent of the income distribution (those with incomes above $730,000 in 2015 dollars) would see their tax burdens increase more than $78,000, a reduction in after-tax income of 5 percent. Taxpayers outside the top 5 percent (those earning less than $300,000in 2015 dollars) would see little change in average after-tax income.” See Tax Policy Center’s Analysis of Senator Clinton’s tax plan.
So the question is: how similar is Donald Trump’s new position to Hilary Clinton’s tax position. While Donald Trump has not given specifics, he is now willing to incorporate new taxes on the rich. See this MSN article.
While the MSN article criticizes Trump for his flip flopping on taxing the rich and federal minimum wage, could Trump’s softening of his position be his appeal to the masses, especially now that he has won the primary audience in getting the Republican nomination? Or is Trump’s position on taxes merely a “read my lips: ‘No new taxes’” maneuvering?
It remains to be seen what the change in philosophy will mean to the tax world and tax practitioners.
Regardless of which proposed tax plan wins, if you know of any individual or corporation that is underpaying their tax liabilities, you should report the individual or corporation and collect an award from the IRS. If you have specific and credible evidence, contact us to evaluate your information and whether it would qualify for an award between 15-30% of the collected proceeds in excess of $2,000,000 paid by the IRS.