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Hilary versus Donald’s Tax Proposals

With the Democrat and Republican frontrunners becoming more defined, it is important to start evaluating the two lead candidates’ tax proposals.

     Hillary Clinton wants to raise both the capital gains tax and the dividend tax from 20% to 24%.   Donald Trump wants to leave the current ceilings of 20%.   On estate taxes, Hillary Clinton wants to lower the $5.45 million exclusion to $3.5 million and also raise the maximum estate tax rate from 40% to 45%. Mr. Trump wants to eliminate the estate tax- not an easy task in an income equality environment.

     Hillary Clinton also wants to put a cap on itemized deductions. This proposal, or factoring in Ted Cruz’s tax return on-a-postcard scheme, spells a trend for less tax bang for the home mortgage interest deduction. This would really affect houses valued under $1.5 million, where homeowners can still have tax deductible mortgages up to $1.1 million.

   Both parties’ platforms will depend on whether our 45th US President enters office with its party on their coattails.   Otherwise, expect more gridlock and less likelihood for change.

     This is an apolitical analysis, and a reminder that, at this point, proposals are merely campaign rhetoric. Nevertheless, sometimes ideas have a way of eventually winding their way into future laws.

     Should Hillary win the November election, expect real estate and stock investors to accelerate sales to lock in the lower capital gains rates before January 1st. It is difficult to predict what changes Trump will make if he becomes president.

Lou Barberini, CPA/PFS| Director Retirement Tax Strategies
2079 Fifteenth Street – E | San Francisco, CA 94114
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