Republican presidential candidate Donald Trump and his Democratic opponent Hillary Clinton don’t agree on much. That’s certainly true when it comes to their tax plans.
You may already have a general sense of how they differ: Trump’s plan calls for a fairly radical simplification of the tax code that would create four brackets—22, 25%, and 33%—and give just about everyone a tax cut; Clinton meanwhile has promised to leave taxes unchanged for anyone making less than $250,000 a year but wants to boost rates and curtail write-offs for wealthier Americans.
But with either candidate, it’s not easy to tell exactly how the thicket of new rates and rules would actually affect you. Thankfully, the non-partisan Tax Policy Center in Washington this week published an in-depth, side-by-side look at both candidates’ proposals.
It should be noted that the results haven’t pleased everyone. The Trump campaign has argued the analysis underestimates the dramatic economic growth his tax cuts would unleash. However, other independent budget scorers, including rightward leaning ones, have largely taken the Tax Policy Center’s side.
If you want to examine Tax Policy Center's analysis yourself, you can find its reports here and here—but to make things simpler, we’ve broken out the numbers for both plans and put them side by side to show just how each candidate’s proposals would affect Americans at a range of income levels.
The Lowest Earners
Who: Singles and married joint filers earning up to $24,800 a year.
Under Clinton plan:
Average tax cut of $100, or 0.7%
Under Trump plan:
Average tax cut of $110, or 0.8%
Trump has proposed increasing the standard deduction to $30,000 for joint filers, up from $12,600, effectively eliminating income taxes for anyone earning less than that amount. (The new threshold for singles will be $15,000.) His campaign literature says, “they get a new one-page form to send the IRS saying, ‘I win.'” Clinton would double child tax credit to $1,000 from $2,000, a boon to low-income parents.
Despite the candidates’ promises, this group includes many part-time workers and retirees (the average Social Security benefit is $16,000 a year) who already owe relatively little under the current system, so the dollar impacts are relatively modest.
How have Americans responded to these proposals so far? While retirees as a group lean towards Trump, Americans at the bottom of the income ladder favor Clinton by a margin of two-to-one, according to Pew poll conducted in June.
The Working Poor
WHO: Singles and married joint filers earning between $24,801 and $48,400.
UNDER CLINTON PLAN: Average tax cut of $140, or 0.4%
under Trump plan: Average tax cut of $400, or 1.1%
These are the poorest working Americans. Full-time Wal-Mart employees earn an average of $13.38 an hour, according the company. Based on a 40-hour work week, that equates to about $27,000 a year—just over the cut-off for this group. The working poor would enjoy only a slight tax cut under Clinton’s tax plan, although they also stand to benefit from some of her other proposals, such as boosting the federal minimum wage to $12 per hour from $7.25. Trump’s plan, meanwhile, would hand these works about $400 each, reducing their effective rate to 7.3% from 8.4%.
The Solid Middle
Who: Singles and married joint filers earning between $48,401 to $83,300.
under Clinton plan: Average tax cut of $110, or 0.2%
under Trump plan: Average tax cut of $1,010, or 1.5%
These workers represent America's middle income quintile—in other words, the solid middle class, including folks who work as registered nurses (median salary $58,000), cops ($48,000), and recent college grads ($51,000). While Trump's campaign is frequently portrayed in the media as catering to the white working class, in fact some his strongest support comes from this somewhat wealthier cohort. One study, conducted during the Republican primary put the median income for Trump voters at $72,000, about $11,000 higher than the median for Clinton voters. Of course, in many ways this should come as no surprise. It's not just Trump's hefty $1,010 handout. Well-paid blue collar workers have seen incomes stagnate over the past generation as economic gains flowed disproportionately to wealthier workers.
The Upper Middle Class
who: Singles and married joint filers earning between $83,301 and $143,100.
under Clinton plan: Average tax cut of $40, or less than 0.1%
under Trump plan: Average tax cut of $2,030 or 1.8%
In a typical year, upper-middle-class professionals would be right in the Republican wheelhouse. Both McCain and Romney enjoyed significant leads among voters who earned more than $100,000. And yet Clinton tops Trump by 8 points despite his promise of a hefty tax cut. One reason, certainly, is Trump’s more-working class vibe. But Clinton has also assiduously courted these voters, tailoring a number of social programs, like paid family leave and curtailing the cost of college, directly to them.
who: Singles and married joint filers earning between $143,101 and $208,800.
under Clinton plan: Average tax hike of $100, or 0.1%
under Trump plan: Average tax cut of $3,270 or 1.9%
Clinton has pledged not to raise taxes on those making less than $250,000 a year. The good news: The cost of her major spending initiatives – including infrastructure, education and childcare – is largely in line with her plan to basically spare these earners, according to the Center for a Responsible Federal Budget. The problem: even under current law America’s budget deficit is expected to balloon over the next decade, meaning Clinton might have to cut back on spending or raise taxes on middle-class earners too.
Meanwhile Trump’s tax cut for this group—which would slash this group’s effective rate from 20.2% to 18.3%—is equal to what the typical American earns in a month. Not that it helped him much. Among those with advanced degrees—in other words, the doctors and lawyers who typically pull in three-figure salaries—he’s losing to Clinton by a two-to-one margin.
who: Singles and married joint filers earning $699,001 and up.
under Clinton plan: Average tax hike of $117,760, or 4.9%
under Trump plan: Average tax cut of $214,690 or 9%
The candidate who earned $675,000 giving speeches to Goldman Sachs doesn’t always come across as the world’s most authentic populist. But her tax plan would cost the rich dearly. Among her proposals is a 4% tax hike for those making more than $5 million and requiring everyone making $1 million to pay at least 30% of their income in taxes. (The super-rich, earning $3.7 million and up, would pay an average of $800,000 more each year under Clinton’s plan, according the analysis.)
Trump, meanwhile, initially struck a populist tone: “The hedge fund guys didn’t build this country.” His actual tax plan, however, is skewed in favor of the rich. It proposes slashing the top income tax rate to 33% from 39.6%, while business owners would fare even better. He’s floated the idea of cutting their rates all the way to 15%. (His annual tax cut for that same group of super-rich: $1.1 million.)
under Clinton plan: Tax revenue increase of $1.4 trillion over 10 years, or 0.6% of GDP
under Trump plan: Tax revenue decrease of $6.2 trillion over 10 years, or 2.6% of GDP
Trump argues his hefty tax cut will unleash America’s business dynamism, boosting annual GDP growth to 3.5% from 2% today and essentially pay for itself by swelling tax receipts. Independent experts see that as dramatically optimistic. According to the Tax Policy Center, Trump’s plan would swell the deficit by $7.2 trillion over the next decade and by more than $20 trillion by 2036.
While Clinton’s proposed tax hikes could create a slight economic headwind, the extra revenue could be re-directed toward paying down the national debt or education and childcare programs.