Tax Wealth & Estate Planning / 10.31.2020

Tax Policy Overview: Trump v. Biden

By Samir Dahman

taxTax policies are always a hot topic in presidential elections. Below, we provide side-by-side comparisons of where the presidential candidates stand on income (corporate and individual) and estate taxes.

In short, President Trump’s plan seems to be to extend the 2017 tax policies, while Joe Biden’s plan includes tax credits for workers and families but increases for those earning more than $400,000, with almost all the increases being borne by the wealthiest 1%.

Income Tax: Individual

TrumpBiden
·  Extend rates through 2030·  No increase for those earning less than $400,000
·  Replace 20% capital gains tier with a           single rate of 15%·  Raise the top rate back to 39.6 percent from 37%
·  Expand opportunity zones·  The current top tax bracket is $518,400 for single filers and $622,050 for married filing joint filers
·  Repeal renewable energy tax credits·  Apply Social Security tax to earnings above $400,000 (but not between $137,700 and $400,000)
·  Tax credits for private education·  Tax capital gains and dividends at ordinary rates (39.6%) for those with annual incomes of more than $1 million
·  Expand the Child Tax Credit to $3,000 per child for children ages 6 to 17 and $3,600 for children under 6
·  Ensure no family spends more than 8.5% of their income on health insurance by expanding access to refundable health premium tax credits
·  Expand the Child and Dependent Care Tax Credit from a $3,000 maximum for qualified expenses to $8,000
·  Up to a $3,000 tax credit to assist elderly family-member’s healthcare
·  Re-enact the First-Time Homebuyers’ Tax Credit of up to $15,000

 

Income Tax: Corporate

TrumpBiden
·       Further lower corporate tax rate·       Raise top corporate income tax rate to 28% from 21%
·       Tax credit designed to create new         jobs and small businesses in America·       Minimum 15% tax on book income so that no corporation pays no taxes
·      Payroll tax cuts·       Tax rate on profits earned by foreign subsidiaries of U.S. firms will be doubled to 21%
·       Tax on corporations that ship jobs overseas in order to sell products back to America

 

Estate Taxes

TrumpBiden
·       Make permanent the current Estate       Tax threshold of $23.16 million (which expires in 2025)·       Reduce the Estate Tax threshold of $23.16 Estate Tax Threshold back to the $11.58 million
·       Stepped-up basis so that individuals can no longer pass on appreciated property without having to pay tax on the gain

·       Right now, when someone dies and passes on an asset, like a home, the person who inherits the property has a basis in the property at the current market value, not what the decedent acquired it for.  For example, if a parent purchased a home for $100,000 in 1980 and then died today when the home is worth $400,000, whomever inherits the home inherits it with a $400,000 basis, in which case they can sell it for $400,000 and pay $0 in capital gains tax.  Under Biden’s plan, the same scenario would result in a taxable $300,000 capital gain.

 

Please contact Samir Dahman at sbd@kjk.com or 614.427.5750 or any of the Estate Planning or Tax Services attorneys at Kohrman Jackson & Krantz to set up a time to discuss how we can best help.

 

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