The candidates’ standings in the polls go up and down. But how would each of them affect our clients and estate planning? This week I’ll look at Hillary Clinton’s tax plan and next week I’ll look at Donald Trump’s tax plan.
First, estate taxes. Hillary Clinton would keep the estate tax. In fact, she would enhance it by returning it to the 2009 law:
- Reduce the applicable exclusion to $3.5 million
- Increase the rate of taxation from 40% to 45%
- Reinstate the $1 million lifetime gift exclusion
Next, income taxes. Hillary Clinton has detailed income tax proposals, including the following:
- Small business can deduct up to $1 million in capital investment
- Institute the Buffett rule, i.e. taxpayers with income above $1 million would pay a minimum 30% effective tax rate
- Impose a 4% surcharge for taxpayers earning above $5 million
- Eliminate the “carried interest” loophole
- Graduated rates for capital gains based on holding period (Holding up to 2 years, ordinary income rates apply; 2-3 years, 36%; 4 years, 32%; 5 years, 28%; 6 years, 24%; 7 or more years, 20%)
The Tax Policy Center estimates that the top 1% of taxpayers with incomes above $750,000 would face average tax increases of $78,000 under the proposed Clinton plan. Those earning less than $300,000 would face no increase.
According to a piece in the New York Times, Clinton’s plan would add complexity to tax laws and would benefit tax lawyers (and presumably estate planning attorneys).
Next week, I’ll look at how Donald Trump’s plan would affect estate planning.
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555