Pub. 5 2016 Issue 8

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 28 T AXES HAVE A significant effect on a bank’s capital. The presidential campaigns are in high gear and tax policy promises to be a hot topic in the upcoming debates. Hillary Clinton Hillary Clinton’s tax platform includes various proposals that affect S corporation bank shareholders: • Impose a four percent “Fair Share Surcharge” on ordinary and capital gain income for taxpayers earning more than $5 million per year • Implement the “Buffett Rule,” which provides an effective tax rate of at least 30 percent for taxpayers with income of more than $1 million per year • Net investment income tax of 3.8 percent would remain in effect • Modify the capital gains tax rates based on how long the investment is held by the taxpayer. Source: Tax Foundation Fiscal Fact, Details and Analysis of Hillary Clinton’s Tax Proposals, January 2016 TAX POLICIES OF THE MAJOR PRESIDENTIAL CANDIDATES By BrianMall, CPA, BKD, LLP Years Held Less than One One to Two Two to Three Three to Four Four to Five Five to Six More than Six Marginal Tax Rate 39.6% 39.6% 36% 32% 28% 24% 20% Net Investment Income Tax 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% Surtax on incomes over $5 million 4% 4% 4% 4% 4% 4% 4% Combined Rate on Capi - tal Gains 47.4% 47.4% 43.8% 39.8% 35.8% 31.8% 27.8% Table 2. Top Marginal Long-Term Capital Gains Tax Rate Schedule under Hillary Clinton’s Tax Plan