Six Democratic Candidates and the Tax Plans they Wish to Employ
The 2017 Tax Cuts and Jobs Act wrought sweeping changes throughout the Internal Revenue Code. As the race continues to see which candidate will face President Donald Trump in the 2020 election; STA explores a brief overview of Joe Biden’s, Bernie Sanders’, Elizabeth Warren’s, Kamala Harris’, Pete Buttigieg’s, and Cory Booker’s tax plans.
Joe Biden
- Former Vice President Joe Biden would raise the highest personal marginal tax rate from 37% to 39.6%;
- Increase the corporate income tax rate from 21% to 28%;
- Make all earned income subject to the social security share of the payroll tax;
- Allow low-income taxpayers over age 65 to claim the earned income tax credit;
- No longer allow taxpayers to step-up their basis for inherited capital assets; and
- Double the capital gains tax for taxpayers earning over $1 million
- As the lead sponsor of the “Inclusive Prosperity Act of 2019,” Vermont Senator Bernie Sanders proposes a 0.5% tax on trading stock, a 0.1% tax on trading bonds.
- To finance his healthcare plan, “Medicare For All,” Senator Sanders would “require employees to pay a 4% income-based premium (exempting the first $29,000);
- Require employers to pay a 7.5% premium (exempting the first $2 million in payroll);
- Limit tax deductions for taxpayers in the top bracket;”
- “Raise the current 20% top rate on long-term capital gains and dividend income to match the 37% rate on wages and salaries;”[1] and
- Implement 77% maximum tax rate on all inheritance income exceeding $1 billion.[2]
- As the lead sponsor of the “For the 99.8 Percent Act,” Senator Sanders would reduce the lifetime gift and estate tax exemption from $11.4 million to $3.5 million.
- Massachusetts Senator Elizabeth Warren will implement a wealth tax of “2% on net worth[3] above $50 million and 3% on net worth above $1 billion;”[4] and
- Impose a 7% corporate tax on all company profits over $100 million.
- Cosponsoring the “Working Families Tax Relief Act of 2019,” Senator Warren would expand the Earned Income Tax Credit by 25% for families with children;
- Make the Child Tax Credit fully refundable; and
- Create a Young Child Tax Credit for taxpayers with children under 6 years old.
- Cosponsoring the “American Family Act of 2019,” Senator Warren would increase the Child Tax Credit from $2,000 a year to $3,000 for children ages 6 to 16 and $3,600 for children 5 years old and under.
- Cosponsoring the “FAMILY ACT,” Senator Warren would levy a 0.2% tax on employee’s wages to fund 12 weeks of paid family leave and split this tax between employers and employees.
- California Senator Kamala Harris would repeal the Tax Cuts and Jobs Act entirely;
- Impose a 5% federal sales tax on the use of nationally legalized recreational marijuana; and
- As the lead sponsor of “LIFT (Livable Incomes for Families Today) the Middle Class Act,” Senator Harris would offer refundable tax credits matching the first $3,000 for single taxpayers with income between $30,000 and $50,000; $6,000 for married couples with income between $60,000 and $100,000.
- To fund her national healthcare plan, Senator Harris would “tax Wall Street stock trades at 0.2%, bond trades at 0.1%, and derivative transactions at 0.002%.”[5]
- Lead sponsor of the “Rent Relief Act of 2019,” Senator Harris would create a refundable tax credit to taxpayers who pay more than 30% of their gross income on rent, up to $100,000 or $125,000 depending on the area.
- Senator Harris also cosponsors the above mentioned “Working Families Tax Relief Act of 2019”, “American Family Act of 2019,” and the “FAMILY ACT,”
- Mayor of South Bend, Indiana, Pete Buttigieg’s tax plan includes; raising the top marginal income tax rate, a wealth tax, a carbon tax, a financial transactions tax, and a tightening of corporate tax breaks.
- New Jersey Senator Cory Booker plans to institute a renter’s tax credit refund equal to the amount spent on rent that exceeds 30% of an eligible taxpayer’s income.
- Additionally, Senator Booker wants to enforce more stringent requirements on Qualified Opportunity Zone (QOZ) reporting requirements. Senator Booker’s potential requirements may increase the cost of compliance associated with investing in a QOZ.
- In his “American Opportunities Account Act,” Senator Booker proposed to raise the top capital gains rate from 20% to 24.2%. However, Senator Booker’s campaign states he would end the current preferential treatment of investment income over earned income (therefore, capital gains may be taxed as high as 37%).
- Regarding estate taxes; Senator Booker plans to increase the tax rate for estates worth $10 million or less from 40% to 45%, tax estates worth between $10 million and $50 million at 50%, and tax estates worth more than $50 million at 65%.
- Senator Booker also cosponsors the aforementioned “Working Families Tax Relief Act of 2019,” the “American Family Act of 2019,” and the “FAMILY ACT.”
No matter the candidate, elections are won based on the experts and strategies employed. Similarly, tax experts can be the difference between a tax victory and inefficient tax liability.
[1] Americans For Tax Fairness Action Fund, 2020 Democratic Presidential Candidates on Taxes and Investments, https://docs.google.com/document/d/1q1zgs45RzWvmU93_hwg8dV_Z0NT5iaOd_JjDIJcOGKU/edit (last updated August 20, 2019).
[2] Sanders.Senate.Gov, Financing Medicare for All, https://www.sanders.senate.gov/download/medicare-for-all-2019-financing?id=860FD1B9-3E8A-4ADD-8C1F-0DEDC8D45BC1&download=1&inline=file (accessed on August 23, 2019).
[3] Your Net worth Is calculated by subtracting your total liabilities from the current market value of your combined assets.
[4] Rocky Mengle, 2020 Election: Tax Plans for All 22 Democratic Presidential Candidates, https://www.kiplinger.com/slideshow/taxes/T043-S001-tax-plans-2020-democratic-presidential-candidates/index.html (last updated August 22, 2019).
[5] Kamala Harris, My Plan for Medicare For All, https://medium.com/@KamalaHarris/my-plan-for-medicare-for-all-7730370dd421 (posted July 29, 2019).
Written by K. Zak
