How will Taxes impact you after the Election?

taxes-2016Dear Mr. Market:

Don’t over think this…quickly name two of the most polarizing topics you can think of. Allow us to throw two out that are often top of mind but very few people actually want to dig in and address…. Politics and Taxes. Both of these ‘ugly’ topics are incredibly relevant as we move closer to an election day that is quickly approaching and will impact nearly everyone for the foreseeable future!

Keep in mind that the information we are sharing is based on what each candidate is currently proposing and could be outdated within minutes of us publishing this article. It is also important to remember that any tax policy changes require congressional approval … one more reason to keep a close eye on this election! We won’t dig into every detail of their tax proposals or share our opinions, but rather highlight some basic facts and allow you to form your own opinions.

Tax Brackets

Trump: His campaign has proposed consolidating the current seven tax bracket structure down to three (33%, 25% and 12%). There would be no taxes for individuals with income under $25,000 and $50,000 for married couples filing jointly. Trump also would cut the corporate tax rate from the current 35% down to 15%. Lastly he would repeal the Affordable Care Act and the tax increases that came with it.

Clinton: Currently her campaign has not proposed any changes to the current tax brackets that are in place. One change that she is looking to introduce is a “fair share surcharge” of 4% on individuals with an adjusted gross income (AGI) over $5 million. Clinton supports the “Buffet Rule” which attempts to make sure millionaires don’t have lower effective tax brackets than their secretaries and closes loopholes for wealthier taxpayers.

Exemptions, exclusions and deductions

Trump: He is looking to accelerate the limitation of itemized deductions and personal exemptions for high-income taxpayers with no change to charitable gifting and mortgage interest.

Clinton: Her team is stating they would like to place limits on itemized deductions and items that are currently excluded from income (Municipal bond tax-free income) to 28%. Charitable deductions would not be included.

Estate Tax

Trump: One of the more drastic changes proposed by either campaign, is Trump proposing to abolish the federal estate tax and completely eliminate the alternative minimum tax.

Clinton: Her campaign has proposed an increase for the top rate from 40% to 45% while also decreasing the estate tax exclusion from the current $5.45 million to $3.5 million.

Long-Term capital gains and dividends

Trump: At this time his campaign is proposing no change to the holding period (one year) required or the top rate, which is currently 20%.

Clinton: She is looking to increase the holding period from one year to two years while also introducing holding periods that would gradually decrease the top long-term rate down to 20% for assets held for longer than six years.

trump-clinton-uncle-samAs we stated before these talking points will certainly change between now and Election Day. For more information or to follow the key platform positions from both candidates we encourage you to go directly to the source and eliminate the middle-man (today’s biased media for either side depending on what you read/watch)! Below is the website for each campaign:

Each of the key talking points that we addressed will impact you as an investor over the next four years. Educate yourself and stay informed of the facts instead of being swayed by the election drama and the media. We only have 62 days until Election Day!

 

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