Discussions on corporate and individual tax for Americans have emerged as a main focus of the 2012 presidential election. President Barack Obama and Governor Mitt Romney have promoted two different strategies on how to decrease the national deficit through tax policy.
President Obama’s plan proposes increasing taxes for high-income households and providing temporary tax relief to create jobs. Mitt Romney’s proposed plan lowers tax rates while not reducing the total amount of tax revenue collected by reducing tax preferences. See below for a brief description of the highlights of their plans:
Governor Mitt Romney
- Permanently extend the 2001 and 2003 tax cuts, currently scheduled to expire in 2013 for all taxpayers.
- Reduce the six current income tax rates by 20 percent and eliminate alternative minimum tax.
- No extension of the tax provisions in the 2009 stimulus act which include the tax credit for higher education, the expanded refundability of the child credit, and the expansion of the earned income tax credit.
- Eliminate the tax on long-term gains, dividends and interest income for married couples filing jointly with income under $200,000 and repeal the estate tax.
- Reduce the corporate income tax rate from 35 percent to 25 percent and make the research and experimentation credit permanent.
- Recoup revenue by reducing or eliminating unspecified tax preferences.
President Barack Obama
- Increase individual income taxes only for individuals with an adjusted gross income over $200,000 ($250,000 for couples).
- Allow 2001-03 tax cuts to expire for only highest income taxpayers, while extending them for lower income taxpayers.
- Limit the value of itemized deductions and specified exclusions to 28 percent.
- Provide a temporary 10 percent tax credit for new jobs and wage increases for businesses.
- Lower the corporate income tax rate to 28% and supplement the reduction by eliminating several business tax breaks.
Which plan makes the most sense to you? Let us know in the comments below.