Review the candidates’ tax proposals:
Ordinary Income
Clinton: Adds a 4% surtax on income over $5 million
Sanders: Establishes four new brackets of 37%, 43%, 48%, and 52%. The top rate applies to taxable income over $10 million. Raises the rate of all other brackets by 2.2%.
Cruz: Establishes a flat rate of 10% on all ordinary income. Increases the standard deduction to $10,000 per filer.
Trump: Establishes four tax brackets, with rates of 0%, 10%, 20% and 25%. The top rate applies to income over $150,000 for single filers and $300,000 for joint filers.
Capital Gains and Dividends
Clinton: Adds a 4% surtax on income over $5 million. Raises rates on medium-term capital gains (investments held for less than six years) to between 24% and 39.6%.
Sanders: Taxes capital gains and dividends at ordinary income rates for households with incomes over $250,000.
Cruz: Lowers the rate on capital gains and dividends income to 10%.
Trump: Eliminates the net investment income surtax (applies to high incomes)
1. Which tax plan(s) is/are proportional taxes?
2. Which plans are the most progressive?
4. Which plans have the same tax rate on income and capital gains?
5. Discuss what principles underlie each plan?