Clinton v. Trump: The Potential Impact on Investors

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It’s coming down to the wire – a real nail-biting fight to the finish, if you will. In just two months, the U.S. will elect the next U.S. president.

All we know now is that Trump is topping Clinton 45% to 43% in the polls. Libertarian Gary Johnson stands with 7%, as the Green Party’s Jill Stein comes in at 2%.

It’s the main contenders that have generated a firestorm debate about the needed direction of the U.S. economy, delivering clashing plans on how to boost growth and get disenfranchised Americans back on their feet.

While I’ll leave my political opinions to the side, I wanted to take a look at what impact both candidates may have when it comes to real estate investing, especially when it comes to tax issues.

When it comes to corporate taxes, the U.S. income tax rate of 35% is one of the highest globally. So much so, it has inhibited corporate investment and job creation in the U.S. 

Trump wants to reduce the peak tax rate to just 15%, with small businesses benefiting the most. According to Trump’s website, the lower “business tax will also end job-killing corporate inversions, and cause trillions in new dollars and wealth to come pouring into our country – and into cities like Detroit. To help unleash this new job creation, we will allow businesses to immediately expense new business investments.”

Trump also wants to allow U.S. companies – which hold more than $2 trillion worth of profits in overseas markets – to repatriate those earnings at just 10%. By allowing them to do so, we could see growth in jobs and business investments. He’s also pledging to cap capital gains and dividend taxes at a flat rate of 20%. Currently the maximum rate is 39.5%.

On the other hand, Clinton has no plans to reduce the 35% corporate tax rate. In fact, according to her website, she will “close tax loopholes like inversions that reward companies for shifting profits and jobs overseas.”

Clinton also wants to be your “small business president” with a promise of cutting red tape, simplifying tax filings, and targeting more tax credits to small business owners. All in an effort to encourage hiring and growth…

She is also pledging to increase capital gains taxes to discourage short-term investing. The plan is to install a sliding scale of rates with short-term investments taxed at a higher rate. The top rate for short-term gains would remain at 43.4%. The increased short-term tax rate would negatively impact most investors.

These are just some of the details we can look forward to hearing more about as the U.S. election nears.