Taxation

“The nation should have a tax system that looks like someone designed it on purpose.” As said by William Simon, the taxation policy in the upcoming Democratic election is being taken up as an issue of significance. 

Of these issues, capital gains is one. These are taxed from the sale of investments like stocks, artwork, and real estate at a rate lower than other income. This ranges from 15 percent to 20 percent, depending on how long they’ve been held. 

On this, some Democratic candidates believe that capital gains should be on an equal stance with income when it comes to taxes. They also believe that a lower capital gains rate basically benefits the wealthy, generates tax shelters, and helps bring income inequality. Joe Biden stands in favor of increasing its tax rate for those with more than $1 million in income. Senator Bernie Sanders talks about ending the capital gains break for the ones with household income above $2,50,000. 

Democratic candidates believed that the 2017 Tax Cuts and Jobs Act that cut the corporate income tax to 21 percent from 35 percent was beneficial for businesses, and they wish to revoke it. Bernie Sanders is one of those who believe that it should be deleted entirely. Whereas Joe Biden stands in favor of raising the rate to 28 percent. To gain taxes from corporations with at least $100 net profits, Biden talks of imposing a 15% tax.  

An innovative idea of the tax system has also come under the name of the CEO tax. Bernie Sanders proposed this with the notion that businesses whose CEOs make at least 50 times more than their median wage for workers should be paying this tax. This would add between 0.5 and 5 percent to the company’s tax bill. Under the Tax Cuts and Jobs Act, a “territorial” tax system had emerged in the US. In this, corporations were made to pay taxes where they earned their profits. Sanders opposes this system and says that all MNCs should pay the same tax rate on domestic and international income.

 

The Earned Income Tax Credit, designed to benefit low-income families, is not reaching its full extent, said some Democratic candidates. Thus they believe that creating new tax credits for small businesses would be a good option. 

Bernie Sanders stresses “extreme wealth tax.” Charging taxes from wealthy Americans would help the nation in equalizing economic background and generating revenue for programs to help middle- and lower-income families, said the candidates. 

Biden talks about increasing the tax rate on Americans in the top-earning category to 39.6 percent. He also wishes to put a 28 percent tax break on wealthy Americans.