The 2018 mid-term election is only a month away. To help voters be better informed as he or she steps in the voting booth, here is a summary of the best available information of what both parties are proposing.
Neither the Democrat or the Republican party have an official party position on taxes. Hence, voters need to take under consideration proposals from the party leadership(s) or lawmaker comments to distill the intentions of the respective parties.
THE DEMOCRAT PARTY
The Democrat leaders in both the House and Senate have unveiled these proposals:
- Raise the corporate tax rate to 25 percent, up from 21 percent
- Raise the top individual tax rate to 39.6 percent, up from 37 percent
- Reduce the estate tax exemption from $11.2 million per person to $5.6 million
- Tax carried interest at ordinary rates rather than the lower capital gains rate
- Expand the alternative minimum tax (AMT)
The Democrat leadership proposal does not include plans popular with some Democrat lawmakers to eliminate the 20 percent pass-through deduction for business and the $10,000 cap on state and local tax deductions.
Several Democrat senators advocate a 0.5 percent tax on stock trades & 0.1 percent tax on bond trades.
THE REPUBLICAN PARTY
The Republican-led House & Means committee released “Tax Reform 2.0”:
- Make the individual tax cuts for individuals permanent.
- Lock in the $10,000 cap on state and local tax deductions.
- Remove the age limit on IRA contributions.
- Allow penalty-free withdrawals from retirement accounts for costs related to a new child, whether by birth or adoption.
- Create a new Universal Savings Account. Individuals could contribute $2,500 each year to a Roth IRA-like account and withdraw the money at any time for any purpose.
- Changes to 529 education plans. Allow accounts to be used to cover the cost of home-schooling, fees, tuition, supplies and equipment related to a trade apprenticeship program and to help pay off student loans.
Remember that Kasperek & Co. Accountants is not taking a position on the merits of these proposals. We just want us to be an informed citizenry!