Clinton Tax Plan Hits Top Earners with Highest Rate Since 1986
(Bloomberg) Hillary Clinton is calling for a 4 percent tax surcharge on Americans making more than $5 million annually, a move that would lead to the highest top U.S. income tax rate in 30 years.
Proposing the 4 percent surcharge, which would apply to just one-fiftieth of 1 percent of Americans, based on 2013 federal data, kicked off an effort by Clinton this week to unveil measures aimed at ensuring the wealthy pay a higher effective tax rate than the middle class.
With the surcharge, that small group of the highest earners would pay as much as 43.6 percent in federal income tax on income from wages. A spokesman for Clinton’s leading rival for the Democratic presidential nomination, Senator Bernie Sanders of Vermont, called it “too little too late.”
“Now she can say she is going after the wealthy," said Steven Bankler, a CPA in San Antonio, Texas, who has analyzed presidential tax returns for more than 20 years. "And what industry is big at $5 million salaries? Wall Street and CEOs, which is one of the things that Sanders has been hitting her on."
Clinton’s push comes as Sanders has gathered strength in key early-state polls. He also wants to raise taxes on the wealthy; he has hinted that he’ll propose a large increase in the top marginal income-tax rate, now 39.6 percent. Sanders plans to release a detailed tax plan before the Feb. 1 Iowa caucuses.
Clinton has also endorsed "the Buffett Rule," a proposal named for billionaire investor Warren Buffett that would set a minimum tax rate of 30 percent for those whose incomes top $2 million. Buffett endorsed her in December. Together, the Buffett Rule and Clinton’s 4 percent surtax would have the effect of significantly raising top earners’ taxes on capital gains, which are now taxed at a 23.8 percent top rate. (The rate was 28 percent when Clinton’s husband, Bill, took office in 1993. Congress cut it to 20 percent during his presidency.)
“Right now, we’re behind and we have to get the wealthy and the corporations to pay their fair share,” Clinton said at a campaign rally in Waterloo, Iowa.
The surcharge would raise $150 billion over a decade and would be imposed on two out of every 10,000 taxpayers, said a Clinton campaign official who asked not to be named. Read more on Accounting Today.