Election 2020

Following the 2020 Presidential Candidates’ Tax Plans

The 2020 presidential election is around the corner, with many states already beginning early voting. Now that the October 15th extended deadline is behind us, many taxpayers are focusing on year-end planning. To help our clients understand what tax changes may occur in the not-too-distant future, we have outlined the various tax policy positions of the two presidential candidates.

Please note that HBK does not support or endorse any political candidates, and this information is being provided for tax planning purposes only. We encourage you to reach out to your HBK advisor to determine what impact these proposals may have on your tax situation.

Tax Matter Joe Biden (D) Donald Trump (R)
Individual Taxes Increase to the top tax rate to 39.6% for Taxpayers making more than $400,000 Potential extension of the 2017 TCJA provisions beyond the sunset date of 2025 and potentially providing a 10% middle class tax cut
Expansion of the Dependent Care Credit, increasing the credit to $8,000—a refundable credit that could provide at maximum 50% of dependent care costs—and expansion of the Earned Income Tax Credit to older workers Expansion of TCJA provisions and additional requirement of providing a valid Social Security Number to claim various tax credits
Elimination of SALT cap from TCJA, and cap itemized deductions at 28% Expansion of TCJA provisions that eliminated itemized deductions beyond 2025 sunset date
Business Taxes Increase in tax rate to 28% with a 15% minimum tax on companies reporting more than $100 million in the US but currently reporting $0 or negative federal income tax No changes
Foreign Tax Paid credit and carryovers allowed No known plan
Expansion of the work opportunity credit to include military spouses; additional 10% “Made in America” tax credit available to companies that create jobs for American workers or revitalize closed or nearly closed facilities or expand No known plan
Reversal of TCJA provisions with regard to depreciation deductions Expansion of TCJA beyond sunset date of 2025
Modification of Qualified Business Income Deduction rules created under the TCJA including rules for real estate investors No known plan
Environmental Tax Potential support for Carbon Tax Blocked carbon capture efforts
End fossil fuel subsidies Supports tax breaks for fossil fuel companies
Restoration of full electric vehicle tax; reinstatement of various eliminated tax credits; expansion of deductions for energy retrofits, smart metering systems or other emission-reducing investments to qualifying buildings; reinstatement of Investment Tax Credit. No known plan
Real Estate End qualified business income deduction for real estate investors Expansion of TCJA provisions beyond sunset date of 2025
Modifications to like-kind-exchange provisions No known plan
Creation of refundable credit of up to $15,000 for first-time home buyers No known plan
Creation of tax credits to incentivize renovating distressed properties as part of the general business credit No known plan
Creation of renters tax credit No known plan
Estate Tax Elimination of step-up basis provisions allowing capital gains to be passed to heirs after death without tax Expansion of TCJA provisions beyond sunset date of 2025
Financial Transactions Elimination of carried interest Elimination of carried interest
No known position on cryptocurrency Publicly indicated does not support cryptocurrency
International Taxation Raise minimum Global Intangible Low-Taxed Income rate to 21% and tighten anti-inversion rules

End certain incentives created under TCJA which allow multinationals to lower taxes on foreign earned income; establish a claw-back provision requiring a company to return public tax benefits when they close American processes and move jobs overseas
Expansion of TCJA provisions beyond sunset date of 2025
Tax Enforcement No specific plan announced Require valid Social Security Number for work if attempting to claim various tax credits; increase wage and information reporting; provide IRS authority to correct errors on tax returns prior to issuing refunds
Compensation and Benefits Implementation of provisions to ensure proper classification of employees as employees as opposed to independent contractors to avoid paying employment taxes Executive Order provided optional deferment of payroll taxes through 12/31/2020 for eligible employees; no confirmation of how or if order would be expanded to 2021
Increase base cap on high earners for social security No position
Creation of “automatic 401k” for eligible workers who do not have access to pension of 401k plans; allow for hardship withdrawal for survivors of domestic violence or sexual assault; allow “catch-up” contributions to retirement accounts from caregivers Expansion of TCJA past sunset date of 2025
Student Loans Comprehensive plan to cancel student loans held by the federal government, tax-free, after income-based repayments have been entered into for 20 years Supports passage of School Choice Legislation providing $5 billion a year on tax credits for donations to private school scholarships

Renewal of the TCJA provisions
Health Care

Eliminate 400% income cap on tax credit eligibility for the premium tax credit

Impose tax penalty on drug manufacturers that increase the cost of their brands, or abusively price generic medications beyond the general inflation rates

Create $5,000 tax credit for use of informal caregivers including family members

Increase tax benefits to older Americans who purchase long term care insurance

Repeal Affordable Care Act

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About the Author(s)

Cassandra Baubie, JD
Cassandra Baubie is an Associate at HBK CPAs & Consultants and is a member of its Tax Advisory Group (TAG). Cassandra joined HBK in 2017. She works in the firm’s Youngstown, Ohio office. She has experience in tax law research and writing. Prior to joining HBK, she worked for Jurist.org, a global legal news organization, and was a member of the University of Pittsburgh Tax Law Review Journal. Cassandra also worked for the University of Pittsburgh School of Law’s Low-Income Tax Clinic where she performed IRS litigation and Tax Court work and provided compliance work for low income individuals and businesses. Cassandra focuses on issues pertaining to State and Local Taxation (SALT), as well as flow through entity taxation. She has been involved in numerous sales and use tax, franchise tax, and corporate income tax audits, VDA’s, and refund requests. She focuses on complex sales and use tax compliance planning, nexus studies and on-site review and training for all SALT related issues, and has managed various engagements as the in-charge team member and has significant experience in multi-state tax issues.

Sarah N. Gaymon, CPA
Sarah Nicole Gaymon, CPA is a Senior Manager in the Tax Advisory Group at HBK CPAs & Consultants located in the West Palm Beach office providing trust and estate support services for the CPAs in all HBK offices. Sarah’s specialty and focus areas include tax compliance and tax consulting for high net worth individuals, family groups, trusts, estates, and gift tax issues. In addition, Sarah specializes in fiduciary accounting for trusts and estates.

Sarah regularly consults on family wealth, succession and estate planning. She also has experience in US planning and compliance related to foreign trusts, foreign estates, and individual foreign tax compliance and residency issues.

Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.