November 14, 2011
The Tax Stance of the Current Republican Candidates
At this time, there are currently seven major Republicans vying for the Republican nomination for president in 2012. Below is our summary of each candidate’s Tax plans.
- Reduction in the number of tax brackets, repeal taxes outlined in Obamacare, fix the Alternative Minimum Tax, and eliminate the Death Tax. In addition, simplify the corporate tax code and allow U.S. companies that generate earnings overseas to bring back those profits and invest them in American jobs and growth.
- Bachmann admires Ronald Reagan and would like to re-institute the Reagan tax model from the 1980s and cap tax rates to below 30%.
Cain’s Plan is referred to as the 9-9-9 Plan and calls for an entire tax code overhall. According to Cain, the 9-9-9 Plan will expand GDP by $2 trillion, create 6 million new jobs, increase business investment by one third, and increase wages by 10%. Consists of:
9% Business Flat Tax
- Gross income, less all purchases from other U.S. located businesses, all capital investment, and net exports.
- Empowerment Zones will offer deductions for the payroll of those employed in the zone.
- Gross income less charitable deductions.
- Empowerment Zones will offer additional deductions for those living and/or working in the zone.
- Unlike a state sales tax, which is an add-on tax that increases the price of goods and services, this is a replacement tax. It replaces taxes that are already embedded in selling prices. By replacing higher marginal rates in the production process with lower marginal rates, marginal production costs actually decline, which will lead to prices being the same or lower, not higher.
The Gingrich plan is to make the United States the most desirable location for new business investment through a series of tax cuts by:
- Stop the 2013 tax increases to promote stability in the economy.
- Eliminating the capital gains tax to make American entrepreneurs more competitive against those in other countries.
- Dramaticallyreducing the corporate income tax (among highest in the world) to 12.5%.
- Allowing for 100% expensing of new equipment to spur innovation and American manufacturing.
- Ending the death taxpermanently.
- Move toward an optional flat tax of 15% that would allow Americans the freedom to choose to file their taxes on a postcard, saving hundreds of billions in unnecessary costs each year.
Paul is a supporter of a Liberty Amendment to the Constitution which would abolish the income and death taxes. Paul states that Capital gains taxes punish success and should be immediately repealed. Paul also proposes eliminating taxes on tips and introducing legislation to let Americans claim more tax credits and deductions, including credits on educational costs, alternative energy vehicles, and health care. He would also abolish the tax on Social Security for Senior Citizens. Paul believes that a Flat Tax or a Fair Tax would each be a better alternative to the current income tax system and would like to repeal the 16th Amendment.
Perry’s plan will offer choice between existing tax code and optional flat tax and includes a 20% top rate for individuals and a 20% top corporation rate. Perry proposes to maintain the favorable deductions for mortgage interest, charity donations and state and local sales taxes. His plan also calls for the elimination of taxes on dividends, capital gains, social security and death taxes.
Romney’s plan includes the maintenance of current marginal rates for individuals and to introduce a 25% corporate rate, as well as, the elimination of certain taxes for those individuals with adjusted gross income under $200,000. Romney would also introduce a long term, simpler tax structure with no death taxes.
Santorum has proposed to reduce the corporate rates in half and to zero for manufacturing companies. He would also plan to permanently extend the Bush tax cuts rates for Capital Gains and Dividend Tax rates’, as well as, repealing the death taxes. Santorum’s plan would introduce a repatriation tax on taxable income outside the United States at a rate of 5% in addition to introducing a simpler, flatter tax system.
A summary of each candidate’s position is included in the chart below. Your tax advisors at Marcum LLP will keep you apprised of all candidates tax positions as we enter into the election year.
Individual Tax Reform Summary
|Flat Tax||NO||YES||YES- optional||NO||YES- optional||NO||NO|
|Eliminate tax on capital gains||YES||YES||YES||YES||YES||YES*||NO|
|Eliminate tax on dividends||NO||YES||NO||NO||YES||YES*||NO|
|Eliminate tax on interest||NO||NO||NO||NO||NO||YES*||NO|
|Eliminate death tax||YES||YES||YES||YES||YES||YES||YES|
*For taxpayers with an Adjusted Gross Income less than $200,000