Tax day is less than two weeks away and that raises an important question: Just how much would your taxes change under each of the leading presidential candidates? And, what would be the impact of their tax plans on the economy over time?
Let's start with the tax plans for individual filers that the candidates are calling for. On this score, Democrats call for the biggest increases. Bernie Sanders would raise income taxes across the board with four new tax brackets of 37 percent, 43 percent, 48 percent and 52 percent. That top rate would apply to earners of over $10 million. All other brackets would see higher rates of 2.2 percent. Sanders would tax capital gains and dividends for households earning more than $250,000 at ordinary income tax rates.
Like her fellow Democrat, Hillary Clinton's plan also raises taxes, but targets the wealthy imposing a 5 percent surtax on taxpayers earning over $5 million. She also wants to raise rates on capital gains, targeting investments held for less than six years, to between 24 percent and 39.6 percent. Both Clinton and Sanders would steepen estate tax rates.
Not surprisingly, the Republicans call for tax cuts. Donald Trump would establish four tax brackets with rates of 0 percent, 10 percent, 20 percent and 25 percent. The top rate applies to income over $150,000 for single filers and $300,000 for joint filers. Trump also favors eliminating the net investment income surtax. Ted Cruz, meanwhile, has called for eliminating the IRS altogether. He promotes a flat tax rate of 10 percent on all ordinary income and lowers the rate on capital gains and dividend income to 10 percent. Both Republican candidates are calling for eliminating the estate tax altogether.
The National Tax Foundation took a look at the impact these plans would have on the economy over ten years. Cruz' plans crushes the opposition. NTU calculates that eliminating income taxes and establishing a flat tax would juice the economy by an additional 13.9 percent over and above what the government is currently projecting over the next decade. Likewise, Trump's plan would promote 11.5 percent growth over the same period. Keep in mind these 10-year growth rates would work out to 1.39 percent at 1.15 percent additional growth annually, under NTU calculations.
Sanders' plan would force the economy to contract 9.5 percent over 10 years while Clinton's program is pretty much a wash, reducing growth by 1 percent over ten years.
It's important to remember one thing: It would be a rare event a new president to get element of a tax plan through Congress. And, changing the tax code dramatically by, say eliminating income taxes and imposing a flat tax, would be a high hurdle for any president.