To educate voters on the extreme tax plan differences between Presidential Candidates Donald J Trump and Senator Bernie Sanders, Tax Expert Tom Wheelwright outlines the potential economic impacts and questions voters should be asking.
Tempe, Arizona (PRWEB) May 10, 2016
CEO, CPA and Tax-Free Wealth Author Tom Wheelwright compares the 2016 Presidential Candidates polar opposite tax plans proposed by Business Leader Donald J Trump and Senator Bernie Sanders. With 71% of the public in favor of tax reform, this is a hot election topic, and it’s important for voters to get educated.
Trump and Sanders are non-establishment candidates proposing very different plans from your traditional Washington D.C. candidate Hilary Clinton. The question to ask is whether these major tax changes would ultimately hurt or help the economy. Trump wants to reduce taxes and bring jobs back home from China, while Sanders wants to raise taxes for everyone, especially the wealthy, to pay for new benefits.
For Trump to flatten and reduce the tax rates, it would require considerable cuts in tax benefits now given to business owners and investors. As a result, Trump’s plan could actually hurt business growth, reduce job creation and create losses in real estate investments.
Sanders’ plan is far left of center, and proposes new taxes to fund free tuition at state colleges and universities, paid family leave and universal healthcare. According to TaxFoundation.org analysis, Bernie Sanders tax plan would increase federal revenues, increase marginal tax rates on both labor and capital and reduce the size of gross domestic product (GDP) by 9.5 percent over the long term.
The economic impact of these tax proposals is important to review. Until more details are announced, Wheelwright adds, “We just know that there will absolutely be unintended consequences whenever you have major changes to the incentives in the tax law.”
What is known is that Donald J Trump’s proposal reforms income tax in a similar way to the plan proposed and enacted by Ronald Reagan in 1986 when Wheelwright worked in the National Tax Department of Ernst Young (then Ernst & Whinney). The goal of Trump’s plan is to broaden the tax base (i.e., reduce or eliminate many deductions and other tax benefits) and flatten/lower the tax rates to encourage investment and job creation.
Trump’s 5-part plan includes:
- Eliminate the estate tax paid by the wealthiest 2% of Americans.
- Lower the tax on capital gains.
- Lower the top corporate rate to 15%.
- Add a 20% import tax.
- Lower the highest tax bracket from its current level of 39.6 percent to just 25 percent.
According to ThinkProgress, Trump has promised his entire tax package will generate economic growth of at least 3 percent a year but as much as 6 percent, “growth that will be tremendous.” Research has not backed up the idea that tax breaks for the rich translate into growth for everyone. In the post-war period, the economy grew at a faster rate when the top marginal tax rate was higher and lower when rates were lower. Studies have found that Ronald Reagan’s tax cuts did not create growth, nor did George W Bush’s plan.
Wheelwright adds, “The unintended consequences of the Trump plan are unknown. Remember, though, that the unintended consequence of the Reagan tax plan was the failure of the savings and loans and massive loss of wealth to those who owned real estate. The loss of value in real estate as a result of the 1986 tax act was much greater than the loss of value in 2009 and 2010 as a result of the mortgage failures.”
In comparison, Senator Bernie Sanders’ plan would raise payroll taxes and individual income taxes for everyone, especially on high-income households. Sander’s plan includes provisions aimed at increasing taxes on high-income households:
- Expand the estate tax.
- Raise capital gains and dividends tax as ordinary income.
- Create a new financial transactions tax on investors.
- Raise the top marginal income tax rate to 54.2 percent
- Move the U.S. toward a worldwide tax system by ending the deferral of foreign-source business income
- Add a new 6.2 percent employer-side payroll tax, a new 2.2 percent broad-based income tax, and eliminate tax expenditures relating to healthcare.
According to TaxFoundation.org analysis, Bernie Sanders tax plan would increase federal revenues, increase marginal tax rates on both labor and capital and reduce the size of gross domestic product (GDP) by 9.5 percent over the long term. This decrease in GDP would translate into an 18.6 percent smaller capital stock and 6.0 million fewer full-time equivalent jobs. After accounting for the economic effects of the tax changes, the plan would end up increasing federal tax revenues by $9.8 trillion over the next decade.
For a timely interview with Tom Wheelwright, please contact
Liz Kelly, Goody PR, 310-987-7207
Tom Wheelwright is a leading tax and wealth expert, Best-Selling Author (Tax-Free Wealth), CPA, CEO of ProVision Wealth. Tom is best known for making taxes “fun, easy and understandable”, and specializes in helping entrepreneurs and investors build wealth through practical and strategic ways that permanently reduce taxes. As a Rich Dad Advisor to Robert Kiyosaki (“Rich Dad Poor Dad”), Tom frequently speaks at Rich Dad conferences worldwide. His work has been featured in Forbes, Accounting Today, ABC News Radio, ESPN Cover Your Assets, the Real Estate Guys Radio Show, Money Radio 1510 Business for Breakfast, AZTV and many more media. http://taxfreewealthadvisor.com
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