Tax hikes expected for the wealthy if Clinton wins

Added 26th October 2016

Democratic candidate Hillary Clinton, tipped to be the next president of the US, is expected to introduce a whole raft of new taxes aimed at the nation’s wealthy once she gets into power.

Tax hikes expected for the wealthy if Clinton wins

According to Bloomberg, Clinton is proposing higher taxes on Americans who earn more than $250,000 (£204,839, €229,786), including a 4% “fair share surcharge” on incomes over $5m a year.

In September, US presidential candidate Hillary Clinton, said she was looking to raise inheritance tax paid by ultra-rich Americans to 65% on property valued at more than $500m (£385m, €445m), in a bid to appeal to the supporters of her former Democratic rival, Bernie Sanders.

Clinton, who is currently leading the polls ahead of Republican rival Donald Trump, is hoping to raise revenue by $1.4trn over the next decade, by taxing the top 1% of US taxpayers, according to the Tax Policy Center.

As a result, the top 1% of wealthy individual would see their after-tax income would fall by an average of 7%. 

Clinton has also proposed new rates on capital gains, so that taxpayers pay higher rates if they hold an investment for less than six years.

She’d also give people less flexibility to lower their tax bills with common strategies.

For example, she would limit the ability of the wealthy to itemise deductions, with the exception of charitable deductions.

She'd also require a minimum effective tax rate of 30% on incomes over $1m, dubbed the “Buffett Rule” after billionaire investor Warren Buffett - a Clinton supporter, who declared it isn't right that his secretary should pay a higher tax rate than he does. 

Trump tax cuts

Trump, by contrast, has said he will cut taxes by $6.2trn over the next 10 years, with the top 1% getting almost half that benefit and a 13.5% boost to their after-tax income

However, it’s still unclear when the tax would be introduced as ordinarily, a tax bill passed in 2017 would go into effect in 2018, giving the wealthy plenty of time to prepare. 

Some commentators are concerned a tax increase passed in 2017 that's retroactive to the beginning of the year.

Earlier this month, International Adviser evaluated the potential impact Trump and Clinton's differing tax policies will have on the US electorate. 

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About Author

Monira Matin

Senior Reporter

Monira joined International Adviser in March 2016 from Informa Global Markets where she worked as a eurobond reporter for over two years, covering fixed income markets. She has previously held a number of editorial positions covering politics, insurance and technology. Monira has a degree in Journalism and Economics from City University.

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