Estate Planning and Tax Lawyer Blog

As I was watching the coverage of the Florida primary last night, I started to wonder what the tax plans were for Newt Gingrich and Mitt Romney, the two leading Republican candidates in this years presidential election. So I did a little research. I write this blog purely to inform and not insert any personal feelings or politics at all. All the information I share is readily available on both candidates’ websites and you can go there to further your knowledge. My goal is to try and consolidate their tax plans into this blog post.

Newt Gingrich’s tax plan, in a nut shell, would give all individual taxpayers the choice between paying their taxes under the current tax system or a flat tax system of 15%. Corporate taxpayers would pay an income tax of 12.5% and be allowed to fully expense capital expenditures (subject to some exceptions).

Gingrich’s choice for individual taxpayers would slightly modify the current tax system by 1) making capital gains, dividends, and interest income tax free, 2) apply a standard deduction of $12,000 for each individual and dependent, and 3) eliminate most of the deductions and credits currently available except the deductions for mortgage interest, charitable deductions, child credits and earned income tax credit. Newt’s plan also repeals the AMT tax and the federal estate tax. It is unknown if the gift tax would be repealed or not. Note the individual “flat tax” is different than previously announced and publicized flat taxes because Gingrich’s flat tax maintains deductions and credits for his flat tax.

Based upon early estimates from the Tax Policy Center, Gingrich’s plan would reduce the federal governments revenue by about 35%. Please note these estimates can change greatly once the full policies are announced and disclosed.

Mitt Romney’s tax plan seeks to permanently extend the 2001-2003 tax cuts, eliminate taxation of investment income for most taxpayers, reduce the corporate income tax rate, eliminate the estate tax, reduce the gift tax and repeal the taxes implemented in 2010 with the health reform bill.

Romney’s plan would permanently extend all the 2001 and 2003 tax cuts and continue a patch on the AMT tax. The plan would eliminate the tax on long-term capital gains, dividends and interest income for married couples filing jointly with income lower than $200,000 ($100,000 for individuals and $150,000 for heads of households). Romney’s plan is to permanently repeal the estate tax but keep the gift tax with a maximum rate of 35% and lifetime exemption of $1 million.

Romney’s corporate tax plan will seek to 1) reduce the corporate income tax rate to 25%, 2) make the research and experimentation credit permanent and 3) extend for one year the full expensing of capital expenditures. The plan would also allow a “tax holiday” for the repatriation of corporate profits held overseas. This would allow companies to bring their profits back into the US without the profits being taxed. Currently, a business pays the income tax based upon the countries tax policy where the business is located. They then keep the money within that country to prevent it being taxed again when brought into the US due to the US’s current high corporate tax rate.

Based upon early estimates from the Tax Policy Center, Romney’s plan would reduce the federal governments revenue by about 16%. Please note these estimates can change greatly once the full policies are announced and disclosed.

To learn more on each candidates tax plan, go to their respective websites to find out more detailed information than I have provided here. Like I said, my goal was to summarize their proposals but not persuade you one way or another. I hope I was able to give you something to think about when it comes time for your state’s primary to take place.