Ordinary individual income tax rates
Current tax rates:
| Barack Obama's tax proposals | Mitt Romney's tax proposals |
Six tax rates with top rate applied to adjusted gross income of $200,000 for individuals, $250,000 for families:
- 10 percent
- 15 percent
- 25 percent
- 28 percent
- 36 percent
- 39.6 percent
| A 20 percent reduction of the current six tax rates. Romney is also considering itemized deductions to a certain dollar amount:
- 8 percent
- 12 percent
- 20 percent
- 22.4 percent
- 26.4 percent
- 28 percent
|
Interest, dividend, capital gains
Certain qualified dividends are currently taxed at capital gains rates, which are zero percent for taxpayers in the 10 percent and 15 percent tax brackets and 15 percent for all other taxpayers.
General interest earnings, i.e., on such investments as CDs, are taxed at ordinary tax rates.
Carried interest, i.e., the share of profits that private equity and hedge fund partners receive as compensation, is taxed at capital gains rates.
| Barack Obama's tax proposals | Mitt Romney's tax proposals |
Increase capital gains tax rate to 20 percent on high-earners.
Impose the so-called Buffett rule, i.e., a minimum 30 percent tax on high-earners.
Dividends taxed as ordinary income for individuals with adjusted gross income of $200,000 ($250,000 for married couples filing jointly).
Carried interest taxed as ordinary income. | Eliminate taxes on investment income for taxpayers with adjusted gross income of less than $200,000.
Retain 15 percent tax on interest, dividends and capital gains for all other taxpayers. |
Estate tax
Currently, estates worth up to $5.12 million are not taxed, with estates worth more than that taxed at 35 percent.
| Barack Obama's tax proposals | Mitt Romney's tax proposals |
| Exempt estates worth up to $3.5 million and increase estate tax rate to 45 percent. | Repeal estate tax permanently. This would enable estates worth any amount to pass from one party to the next with no tax. |
Alternative minimum tax (AMT)
Separate tax rates of 26 percent and 28 percent currently apply to certain taxpayers who make more than an excluded threshold amount.
| Barack Obama's tax proposals | Mitt Romney's tax proposals |
| Replace the AMT with the so-called Buffett rule, which would require people making more than $1 million a year to pay at least 30 percent of investment income in taxes. | Repeal the AMT altogether. |
Corporate tax rate
The corporate tax rate is 35 percent at the present time.
| Barack Obama's tax proposals | Mitt Romney's tax proposals |
| The proposed rate is 28 percent, except for manufacturers, which would face a 25 percent rate. | The proposed rate is 25 percent. |
International taxes
This is generally a worldwide system where all income, regardless of where earned, is taxed.
| Barack Obama's tax proposals | Mitt Romney's tax proposals |
| Institute a minimum tax on overseas profits and other international proposals. | Institute a territorial system that would tax U.S.-source profits of multinational corporations but would exempt profits earned abroad. |
Research and development (R&D)
There was a 20 percent credit for qualified R&D expenditures in excess of a base amount; a 14 percent simplified credit was available to eligible taxpayers. This R&D credit expired Dec. 31, 2011. It's expected to be renewed.
| Barack Obama's tax proposals | Mitt Romney's tax proposals |
| Reinstate the current business R&D credit that expired Dec. 31, 2011. | Strengthen (no details provided) and make permanent an R&D credit. |
Energy
A renewable electricity production tax credit for, in part, wind, solar, geothermal energy production is available, as is a variety of tax credits and deductions for oil and gas operations.
| Barack Obama's tax proposals | Mitt Romney's tax proposals |
| Make the tax credit for production of renewable electricity permanent and refundable.
Eliminate tax preferences for fossil fuels. | Streamline energy production permitting. Focus on traditional energy resources rather than green technologies that typically are too expensive to compete in the marketplace. |
Note: Many of these provisions are set to expire at the end of 2012.
