Clinton also plans to borrow an idea from her former rival for the Democratic nomination, Senator Bernie Sanders, and create a graduated set of rates for the estate tax, topping out at 65 percent. Under current law, a 40 percent tax rate applies only to estates worth more than $5.45 million. Clinton had already proposed to increase the rate to 45 percent and lower the threshold to $3.5 million.
Higher Rates
Now, she will also call for setting rates of 50 percent for estates worth more than $10 million; 55 percent for those worth more than $50 million and 65 percent for those worth more than $500 million, according to the budget group’s report -- which said the information came from Clinton’s campaign. In addition, Clinton will propose doing away with a provision in current law called “stepped-up basis,” which allows heirs to reset the taxable value of assets without paying tax on their appreciation. Combined, these proposals would raise another $250 billion over 10 years, the report estimates.
Clinton will also propose limiting the tax benefits of so-called “like-kind exchanges,” which will affect investors in real estate, art and other properties. Currently, such investors can defer paying capital gains taxes when they sell such assets if they simultaneously reinvest the proceeds in similar property. Clinton’s proposal would raise $50 billion over a decade, the committee estimates.
‘Debt-Free College’
When it comes to spending, Clinton’s published proposal for “debt-free college” for students from lower- and middle-income families who attend four-year institutions and for free community college would now cost $500 billion -- a $150 billion increase from prior estimates, the committee said. That’s because the campaign now wants to also provide free tuition to students at in-state public universities if their families make less than $125,000 a year, the report said.
Clinton also wants to allow individuals to become eligible to “buy in” to Medicare -- government health insurance for those over age 65 -- earlier, at age 55. She had mentioned that general option in a speech in Virginia in May, but had not specified the age. Her published plan also calls for spending $40 billion on community health centers over a decade. Combined, the two health proposals would cost $100 billion over a decade, the committee found.
Because both their plans are estimated to generate red ink, the committee’s report gave high marks to neither Trump nor Clinton for responsible budgeting. “The next president will enter office with the national debt at post-World War II record high levels,” the report said. It noted that debt held by the public currently totals $14 trillion -- almost 77 percent of U.S. gross domestic product. It’s projected to grow as a share of the economy to roughly 86 percent by 2026 and about 150 percent by 2050.
“This large and growing national debt threatens to slow economic growth and is ultimately unsustainable,” the report said. “Yet neither presidential candidate has a plan to address it.”
This article was provided by Bloomberg News.