Presidential candidate Donald Trump provided new details on his tax reform plan last week, but the campaign provided conflicting information on how the 15% business rate would apply to pass-through businesses. Democratic candidate Hillary Clinton left no ambiguity in her new proposal to increase the estate tax rate to 65%

Trump's new tax platform largely follows the proposals he laid out earlier, but he did provide more information in the following areas:

  • All business incentives except for the research credit would be repealed.
  • Full expensing of business equipment would be available only for manufacturing businesses and those businesses would lose the ability to deduct interest.
  • Estate tax repeal would be paired with the imposition of tax on the capital gain of assets in the estate after a $10 million exemption.
  • The standard deduction would be $15,000 for singles and $$30,000 for joint filers.
  • The above-the-line deduction for child and elder care would be capped at $5,000 and would not be available if income exceeded $250,000 for singles and $500,000 for joint filers.
  • An alternative child care spending rebate would be made available to certain low-income taxpayer through the earned income tax credit.
  • All taxpayers would be eligible to contribute up to $2,000 to tax-preferred dependent care accounts, with a $1,000 match available for low-income taxpayers.

The biggest controversy erupted after conflicting statements emerged about whether pass-through businesses could enjoy the 15% corporate rate. Several Trump campaign surrogates indicated they had been told pass-throughs would no longer qualify for the rate, but the campaign itself did not confirm it and other stakeholders indicated they had been told the opposite.

The Trump campaign has since released a few more details, although the total picture is not completely clear. According to the most recent statement, pass-throughs will indeed be eligible for the reduced rate but only "small businesses" will enjoy the rate cut while still getting pass-through treatment. "Large business" pass-throughs will be eligible for the rate only if they elect to be taxed like C corporations, and their distributions are subject to dividend tax. There is no further information on the threshold that would divide large businesses from small businesses.

Clinton meanwhile is now promising to raise the top estate tax rate to 65%, similar to a proposal offered by her primary challenger, Sen. Bernie Sanders, I-Vt. She had previously suggested raising the estate tax rate from the current 35% to 45%.

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