Government

Clinton, Trump Restate Tax Policies In Final Debate

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

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On October 19th, in their third and final debate before the US election, Republican candidate Donald Trump and Democratic candidate Hillary Clinton restated their widely different tax policies, without providing any new detail.

In reply to a question on tax policy, Clinton plugged her policies to provide the funds to grow the economy and “support middle class families,” by having “the wealthy pay their fair share.” She repeated, however, that she would “not raise taxes on anyone making $250,000 or less [and] not add a penny to the [federal] debt.”

By contrast, she said, Trump’s plan “advocates for the largest tax cuts we’ve ever seen. … His whole plan is to give the biggest tax breaks ever to the wealthy and to corporations, adding $20 trillion to our debt. … It truly will be trickle-down economics on steroids. … We tried that. It has not worked.”

Trump countered that her plan “to raise taxes is a disaster. … We’re going to cut taxes massively. We’ll cut business taxes massively. They’re going to start hiring people. We’re going to bring the $2.5 trillion [in deferred US multinational foreign earnings] that’s offshore back into the country. We’re going to start the [economic growth] engine rolling again.”

He also pointed out that he would re-negotiate the US’s “horrible” existing trade agreements, under which “jobs are being sucked out of our economy.” He called the North American Free Trade Agreement “one of the worst deals ever. …Our jobs have fled to Mexico.” He again accused Clinton (which she strenuously denied) of wanting to sign the Trans-Pacific Partnership trade treaty.

Trump dumps 0% tax-rate proposal

By Bankrate

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When Donald J. Trump issued his original tax plan in September of last year, the then-candidate for the Republican presidential nomination promised that some Americans wouldn’t owe any tax at all.

In a speech Monday before the Detroit Economic Club, the now nominee erased that no-tax option.

Original plan had a 0% rate

Trump’s original proposal called for 4 tax brackets, ranging from 0% to 25%.

“If you are single and earn less than $25,000, or married and jointly earn less than $50,000, you will not owe any income tax,” Trump proclaimed last year. “That removes nearly 75 million households — over 50% — from the income tax rolls.”

His new plan would put some of those folks back on the Internal Revenue Service’s radar.

Fewer brackets, higher tax rates

Trump, apparently in a sign of Republican Party conciliation and economic reality, has revised his tax plan to follow the tax rates and income brackets included in the House Republicans’ tax reform plan.

That proposal, backed by Republican budget guru and current House Speaker Paul Ryan, calls for 3 individual tax rates: 12%, 25% and 33%.

Trump’s 0% tax rate is gone.

Still, the Republican candidate told his packed house at the Detroit event that “many American workers” will find “their tax rate will be zero.” He’s basing this on a proposal for higher standard deduction amounts that was included in a GOP tax reform plan released in June.

“This, in effect, creates a larger 0 percent bracket,” the Republican tax plan says. “As a result, taxpayers who are currently in the 10-percent bracket always will pay lower taxes than under current law.”

Reaching out to parents

Trump has offered another new tax proposal that takes aim at Democratic opponent Hillary Clinton and her lead among women voters.

He wants to allow parents to fully deduct from their taxes the average costs of child care spending.

Clinton has proposed capping child care costs at 10% of a family’s income. The former secretary of state also supports a tax credit of up to $1,200 for adult family members who care for their aging parents.

Deficit question lingers

Trump’s speech to the Motor City gathering dealt with broad tax policy generalizations, as is generally the case for such talks during an election year.

He did promise, though, that “in the coming weeks, we will be offering more detail on all of these policies.”

Those details should tell us whether his new tax plan will be less costly than the nearly $10 trillion estimate that bedeviled his original proposal. Some Trump surrogates have suggested the new figure will be in the $3 trillion deficit range. Bankrate will let you know if that lower deficit amount is correct, as well as what’s in the other new Trump tax-plan specifics as they are announced.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Senate OKs tax break for Olympic medalists

By Bankrate

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

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With the 2016 Summer Olympics starting this week in Rio de Janeiro, members of Congress are again doing their version of the “USA, USA” chant. They’ve introduced legislation that would make the money won by U.S. Olympic medalists tax-free.

It’s not a new effort. For the last few Olympic games, lawmakers in both the House and Senate have proposed the tax break for winning U.S. competitors. Those proposals have always failed.

This year, however, it looks as if Congress might, to borrow an analogy from the summer event, clear the legislative hurdle.

Olympic athletes’ tax break

Before recessing for the Republican and Democratic presidential nominating conventions in mid-July, the Senate passed the United States Appreciation for Olympians and Paralympians Act.

The bill, S. 2650, would amend the tax code so that Olympic medalists wouldn’t have to report as income the cash prizes that the U.S. Olympic Committee presents them. That’s $25,000 for winning a gold medal, $15,000 for a silver and $10,000 for bronze.

In addition, the value of the medals themselves, which under current law are considered taxable compensation, also would be tax-free. The International Olympic Committee requires the medals to contain a minimum amount of the metal for which they are named.

The same tax exemptions would apply to U.S. Paralympic medalists.

However, any related earnings that Olympians receive, such as corporate sponsorships, would remain taxable income.

Deserved tax relief

Sen. John Thune, R-S.D., who introduced the bill, says it “sends the right message to Team USA, both present and future.”

Olympic athletes deserve the tax relief, says Thune, as repayment for their “years of relentless training and hard work, a significant financial commitment, and an immeasurable amount of sacrifice. It’s no understatement to say that for these high-performing athletes, the chance to compete for an Olympic medal on this world stage is an opportunity second to none.”

Retroactive tax relief

The House, like the Senate, is in recess until Sept. 6, so it won’t get a chance to act on the taxation of Olympic athlete compensation until after the 2016 summer games have concluded.

The measure, however, would apply to medals and prize money that competitors receive for this and future Olympic years.

The bill’s cosponsor, Sen. Chuck Schumer, D-N.Y., headed this week to Lake Placid, New York, the official United States’ Winter Olympics training facility.

The upstate New York town also was in 1980 the site of arguably America’s greatest Olympic victory, the U.S. men’s hockey team’s “Miracle on Ice” defeat of the Soviet Union national team. The Americans’ subsequent win over Finland earned the players that year’s ice hockey gold medal.

Before departing for the iconic Olympic location, Schumer urged House members to pass the bill when Congress returns to Washington, D.C., next month.

The Internal Revenue Service shouldn’t impose a victory tax on athletes who work hard training year-round, said Schumer.

Do you agree with Thune and Schumer that U.S. Olympic athletes deserve to escape tax on their medal winnings?

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.