Understanding Tax Plans: Trump v Clinton : Kate Kahle

In a world where policy is almost never discussed in politics, it is important to know what your choices plan to actually DO once/if they are in office, instead of letting petty name-calling and clever advertising be the sole influencers of your support. So, here's how the candidates have proposed to change the American tax system if they are elected.
 To analyze the candidates' tax plans, we must first understand the current american tax plans, which is pretty complicated as it is. Essentially, you are taxed by how much money you make following the tax brackets shown below.

However, no matter how much you make the first 18 thousand is taxed at 10%, 18 thousand to 37 thousand is taxed at 15% and so on. But it isn't that simple.  The US tax system allows you to deduct certain expenses from your income tax, like charitable donations, retirement savings, mortgage payments, etc. You can either take the aforementioned deductions by listing them out, or take the "standard deduction", which everyone can get. There is also a one thousand dollar tax credit for each dependent (children and the elderly, as well as disabled people dependent on the taxpayer for income) in a household. Under this plan, a family of four making the median national income of $52,000 would only pay $553 in taxes, just under 1% of their income, but as you make more, your tax percentage gets higher. 

Now for how the presidential candidates have proposed to change the tax plan. For my data I have used the Tax Foundation, which is generally considered nonpartisan, but is conservative leaning. 

Clinton

Hillary Clinton would mainly keep the tax plan the same, with five main differences:

1. Income over $5 million a year would be taxed at 43.6% as opposed to the current 39.6%
2. Raise taxed on capital gains from 20% to 24%
3. households with over $1 million in income would have to pay at least a 30% effective tax rate, which means that they couldn't use deductions to get taxed under 30% of their income
4. Carried interest would be taxed like regular income ( carried interests allow many bankers to list their income as "capital gains" and not income, so they get a lower tax rate)
5. Double the child tax credit and introduce a new $1,200 tax for caregivers

Under this plan, those making over $300,000 would see a slight increase in their taxes, but those making the median household income of $52,000 would see their taxes drop to $0 because of the increased child tax credit. This seems great, but the problem with increasing taxes is it discourages investment and business spending. The Tax Foundation estimates that under the Clinton plans the overall US economic output would drop by around 1%. It would also create new government revenue which would likely go to subsidized college, infrastructure, and paid family leave.

Trump

Donald's new tax plan (which is very different from the one he had released in June) would feature only 4 marginal tax brackets (shown below), which would work in the same way as the current us tax brackets described above.

He would also cap deductibles for married couples at $2,000 a year,  make childcare expenses deductible up to the average cost of childcare in your state, and increase the standard deduction from the current $12,000 to $30,000 and get rid of personal exemptions. The lack of personal exemptions would mean that for families with single parents, or with more than 3 children making $60, 000-$100,000 (which is 7.8 million households), taxes would actually increase, but for the rest of us, taxes would stay the same or go down. 

Trump also plans to decrease the corporate tax rates from 35% to 15%, and seek to get back some of the offshore profits of US companies. 

In total, not accounting for macroeconomic effects, Trump's plan would lower federal income by $4.4-$7.2 trillion over the next 10 years.  However, lower taxes encourage investment, just as higher taxes discourage it, so lower taxes could lead to more income to tax. Although this is true, these proposed was cut WILL NOT "PAY FOR THEMSELVES", as has been proven by both the Regan and Bush administration's tax plans, which promoted growth, but lowered federal revenue.  Even after these macroeconomic effects, the Tax Foundation (which, if you recall is conservative leaning) says Trump's plan will decrease revenue by $2.6-$3.9 trillion. This does not mesh well with how Trump plans to spend an estimated $500 billion more on the military and more on other programs. Even with his proposed budget cuts, even the most optimistic projections have Trump adding $2 trillion to the National Debt, which is Ten times greater than under Clinton's plan. Other sources have Trump's debt at $7.2 trillion, 36 times Clinton's plan. 

I think that it is important that people know the policy they are actually voting for and not just voting for a slogan. Since elections became about rhetoric instead of effects with the election of 1840, people have been voting blindly, based on slogans or on slurring the other candidate (Thomas Jefferson's campaign called President Adams a "hideous hermaphroditical character, which has neither the force and firmness of a man, or the gentleness and sensibilities of a woman")

http://www.taxpolicycenter.org/publications/updated-analysis-hillary-clintons-tax-proposals

http://www.taxpolicycenter.org/publications/analysis-donald-trumps-revised-tax-plan

http://taxfoundation.org/sites/default/files/docs/TaxFoundation-FF496.pdf

http://taxfoundation.org/article/details-and-analysis-donald-trump-tax-reform-plan-september-2016