Every four years on the first day of each major political party’s convention, they adopt a broad-based platform setting forth the positions of the party at large.  While not held up as hard and fast rules, the procedures through which the party platforms are adopted impart some degree of consensus among the party.  With both Democrats and Republicans now having published their respective party platforms, this blog attempts to identify the tax policies proposed by the two major parties, and how those tax policies agree with the tax plans of their respective nominees.

The Republicans

The Republican party adopted its platform on Monday, July 18, 2016 on the first day of its convention in Cleveland.  Not surprisingly, the Republican platform calls the complexity of the current tax code into question, and suggests “start[ing] anew.”  The platform also points out rates must be adjusted which presently have the effect of penalizing saving and discouraging investment.  While the platform considers the importance of tax provisions which would help ease the burden on the poor and middle class, it suggests eliminating loopholes and special interest provisions.  The most radical proposal in the 2016 Republican Platform contemplates a complete repeal of the Sixteenth Amendment authorizing the Federal Income Tax, coupled with implementing a “national sales tax”.

In addition to the broad statements above, the 2016 Republican Platform also suggests:

• Repealing the Affordable Care Act (Obama Care) and replacing it with an approach based on “genuine competition, patient choice, excellent care, wellness, and timely access to treatment”;
• Lowering the corporate tax rate to be on par with, or below, the rates of other industrial nations;
• Adopting an amendment aimed at requiring a super-majority vote for any tax increase, with exceptions for “war or legitimate emergencies”;
• Removing all marriage penalties from the Internal Revenue Code;
• Repealing the Foreign Account Tax Compliance Act (FATCA) and the Foreign Bank and Asset Reporting (FBAR) requirements, and changing residency-based taxation for U.S. citizens overseas;
• Making it easier for US businesses overseas to repatriate their earnings for investment and job-creation in the US;
• Considering options to save Social Security without increasing taxes; and
• Making the Federal Tax Code so simple the IRS can be abolished.

While republican nominee Donald Trump’s tax plan is somewhat in line with the 2016 Republican Platform, he has called for ending “deferral of taxes on corporate income earned abroad”, which is more in line with the Democratic Platform.  Other areas of disagreement with the 2016 Republican Platform include reducing the rate for highest bracket taxpayers to 25%, whereas the Republicans want to lower the current rate of 39.6% to 33%.

The Democrats

This past Monday, July 25^th, the Democrats began their convention, and the party published its 2016 Platform.  Unsurprisingly, the tax policies included in the 2016 Democratic Party Platform focus on increasing taxes for high-income individuals, and expanding entitlements for the poor.  Some of these tax-related proposals include:

• Taxing the income of people making above $250,000 to help fund Social Security;
• Expanding the earned income tax credit (EITC) program for low-wage workers not raising children;
• Expanding the child tax credit (CTC) by making more of it refundable;
• Supporting a financial transactions tax on Wall Street to curb excessive speculation and high frequency trading;
• Repealing tax provisions that benefit “millionaires and billionaires”;
• Establishing a “multimillionaire surtax to ensure millionaires and billionaires pay their fair share”;
• Restoring “fair taxation” on multimillion dollar estates;
• Making sure law-abiding Americans living abroad are not unfairly penalized by “finding the right FATCA and FBAR solutions for them”;
• Providing tax relief to families caring for aging relatives or family members with chronic illness or disabilities;
• Continuing to support the interest tax exemption on municipal bonds and work to establish a permanent vision of Build America Bonds as an additional tool to encourage infrastructure investment by state and local governments;
• Eliminating subsidies for fossil fuel companies and extending tax incentives for clean energy;
• Clawing back tax breaks for companies that ship jobs overseas and crack down on inversions and other methods companies use to “dodge their tax responsibilities”;
• Ending deferral of foreign profits;
• Supporting small businesses by providing unspecified “tax relief and simplification”;
• Making permanent and expanding the New Markets Tax Credit;
• Ensuring that new spending and tax cuts are offset; and
• Repealing the ACA’s excise tax on high-cost health insurance.

Democratic nominee Hillary Clinton’s tax plan is fairly in line with the 2016 Democratic Party Platform, although her plan is a bit more specific.  Her plan includes a “Fair Share Surcharge”, which will impose an extra 4% surtax on taxpayers making more than $5,000,000 a year, and tax relief for caregivers in the form of a $1,200 credit.  Furthermore, to “promote long-term investment”, her plan also proposes implementing a capital gains tax of 39.6% (equal to the top income tax rate), which can be reduced down to 20% over the course of a 6-year investment holding period.

While we can speculate on the future of our country’s tax landscape based on which party wins the Presidency, the House Ways and Means Committee is still responsible for promulgating tax legislation.  Therefore, although the President’s (and their party’s) tax plan is certainly an indicator of things to come, to truly anticipate where we are headed, we must consider the overall political landscape in Congress.