Taxing Politics

The 2008 political season officially began last night in Iowa. Accordingly, I thought it would be helpful to look at each candidate's tax policies, especially their estate tax policies. I've listed only those who I consider to be the viable candidates. For fun, I put them in order of how they finished in the Iowa caucuses.

The Democratic Candidates

1. Barack Obama
   Income Taxes
   --> Senator Obama appears to favor a reduction in income taxes for individuals making less than $50,000. This appears to be balanced by an increase on those whose income puts them in the top 1% of the country. He voted against a repeal of the alternative minimum tax.
   Estate Taxes
   --> It is clear that Senator Obama is in favor of keeping a federal estate tax, but it is unclear at what level. He voted againt raising the threshold to $5,000,000 per person.
   Other Tax and Probate Related Issues
   --> Senator Obama is in favor of closing tax loopholes for companies that move jobs abroad and in favor of rewarding companies that create jobs in America.
2. John Edwards
   Income Taxes
   --> Senator Edwards appears to favor using a combination of credits to reduce the taxes of those earning less than $75,000. The most notable credit is a large increase for Child Care. He voted against a repeal of the alternative minimum tax. He wants an increase in the capital gains tax rate to 28% for those earning over $250,000.
   Estate Taxes
   --> Senator Edwards is in favor of keeping the federal estate tax at the same levels as are currently in place, $2,000,000 per person.
   Other Tax and Probate Related Issues
   --> Senator Edwards is in favor of closing tax loopholes for hedge fund and private equity managers (meaning that they would be taxed at income tax rates, not capital gains tax rates). He also had a very interesting proposal that would require the IRS to prepare tax returns for those people who are simply W-2 workers or receive all income from 1099's.
3. Hillary Clinton (No real public plan yet)
   Income Taxes
   --> Senator Clinton wants to keep the AMT, but it is unclear at what level.
   Estate Taxes
   --> Senator Clinton is in favor of keeping the federal estate tax at the same levels that will be in place starting in 2009, $3,500,000 per person.
   Other Tax and Probate Related Issues
   --> Senator Clinton proposes increasing or removing the $95,000 cap from the payroll tax. Currently, only the first $95,000 of income is subject to payroll tax. Payroll taxes are for such things as Social Security, Medicaid and Medicare.

The Republican Candidates

1. Mike Huckabee
   Governor Huckabee wants to eliminate ALL income, payaroll, gift, estate, capital gains, alternative minimum, Social Security, Medicare and self employment taxes. He wants to replace these with a consumption tax (i.e. a tax on what we buy - similar to a sales tax). The consumption tax rate would be about 23% inclusive (or about 30-34% exclusive). For a view of the plan known as FairTax given by supporters, click here. For an opposing view, click here. The consumption tax would theoretically be on EVERYTHING, including new home purchases, rent, doctor's bills, and worst of all - LEGAL FEES. It would however exclude used items. (Hmm... I wonder if you can have used legal services...)
   Income Taxes
   --> See above
   Estate Taxes
   --> See above
   Other Tax and Probate Related Issues
   --> See above
2. W. Mitt Romney
   Income Taxes
   --> Governor Romney generally wants to lower tax rates for everyone.
   Estate Taxes
   --> Governor Romney is in favor of permanently repealing the estate tax. It is unclear if he wishes to repeal the gift tax.
   Other Tax and Probate Related Issues
   --> Governor Romney wants to get rid of taxes on interest, dividends and capital gains for those with an adjusted gross income under $200,000.
3. Fred Thompson
   Income Taxes
   --> Former Senator Thompson plans to index the AMT for now and repeal it eventually. He believes in instituting a flat tax which would give much larger personal exemptions, but get rid of all deductions.
   Estate Taxes
   --> Former Senator Thompson wants to elimate the estate tax. It is unclear if he wishes to repeal the gift tax.
   Other Tax and Probate Related Issues
   --> He has an interesting proposal to let tax payers choose the current tax forms or a flat rate form with only 2 exemptions.
4. John McCain
   Income Taxes
   --> Senator McCain is in favor of permanently repealing the AMT. He would make the currently scheduled tax levels permanent.
   Estate Taxes
   --> It appears Senator McCain wants to elimate the estate tax. It is unclear if he wishes to repeal the gift tax.
   Other Tax and Probate Related Issues
   --> Would ban taxes on cell phone messages. (I don't think that there is one...)
5. Ron Paul
   Congressman Paul wants to get rid of the income tax completely (which would require severe spending cuts).
   Income Taxes
   --> See above
   Estate Taxes
   --> It appears that Congressman Paul wants to eliminate the gift, estate and GST tax.
   Other Tax and Probate Related Issues
   --> It appears he wants to fund the goverment with fees such as: tariffs, excise taxes, user fees and highway fees.
6. Rudy Giuliani
   Income Taxes
   --> Former Mayor Giuliani intends to permanently lower the marginal rates to what they will be under the Bush tax act, or lower. He intends to tie the AMT to inflation. He also proposes an income exclusion up to $15,000 for families without employer based health care.
   Estate Taxes
   --> Former Mayor Giuliani wants to eliminate the estate tax. It is unclear if he wishes to repeal the gift tax.
   Other Tax and Probate Related Issues
   --> He wants to drop the corporate tax rate from 35% to 25%.

Sources include: www.ontheissues.org, the candidate's websites, and various news articles.