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A Look at the Democratic Presidential Candidates’ Positions on Tax Reform

Presidential hopefuls on the Democratic side have not focused on taxes as much as the Republican candidates, and to date, have released few details on their plans for tax reform (if any). To view our Jan. 26 post focusing on the tax reform positions of the top five Republican candidates for president, click here.

However, we do know the following:



    • Hillary Clinton has proposed requiring people earning more than $1 million annually to pay at least a 30% rate — the so-called “Buffett Rule” — and imposing a “Fair Share Surcharge” of 4% on all income over $5 million (not just wages). Former Secretary of State Clinton's campaign has also indicated that she would close the “Romney loophole,” namely the unlimited accumulation of investment returns in IRAs. Although Clinton’s proposed tax increases on high-income taxpayers would presumably incent retirement plan participation, she is also proposing to significantly limit the benefit of retirement savings vehicles to those same taxpayers (e.g., by capping balances). It is worth noting that during her failed 2007 presidential campaign, Clinton proposed to allow those without access to save up to $5,000 per year in “American Retirement Accounts.” No one would be required to have an account, but the federal government would incent participation by providing a matching contribution up to $1,000 for married couples making less than $60,000 and $500 for those making between $60,000 and $100,000. Any provider would be permitted to offer an American Retirement Account, provided they offer diversified investment options that include a passively managed lifecycle fund as a default.


    • RELATED: Presidential Candidates' Stands on the DOL Fiduciary Rule




    • Sen. Bernie Sanders (I-Vt.) has not provided a specific tax reform plan, although he has indicated that he supports increasing taxes on the wealthy in order to expand and enhance Social Security. His focus has been almost entirely on Social Security, and it is not clear whether or not he supports maintaining the current tax treatment of private-sector retirement plans.

    • Martin O’Malley has not put forth a tax plan; with respect to the retirement system, he has largely put forth proposals having to do with Social Security. However, the former Maryland governor does support President Obama’s automatic IRA proposal requiring certain employers to either provide a retirement plan or enroll their employees in a payroll deduction IRA.


    Our next post, on the presidential candidates’ positions on the DOL’s conflict-of-interest rule, will be published Feb. 1.


    Michael P. Kreps is a principal at Groom Law Group, where he counsels employers, plan sponsors, financial institutions, trade associations and coalitions on retirement, health, tax and employment matters. Previously, he served as the Senior Pensions and Employment Counsel for the U.S. Senate Committee on Health, Education, Labor, and Pensions from the 110th through the 114th Congresses.

    Kevin L. Walsh is an associate in the Title I group at Groom Law Group. He previously worked in the U.S. House of Representatives, first with the Committee on Financial Services and later as a legislative assistant for the late Rep. Michael Oxley (R-Ohio). He also served as a law clerk for Judge D. Michael Fisher of the U.S. Court of Appeals for the Third Circuit.

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