Election 2012: How the candidates' tax plans stack up

@CNNMoney February 17, 2012: 5:24 AM ET
For the 2012 election, everybody's got a tax plan.

For the 2012 election, everybody's got a tax plan.

NEW YORK (CNNMoney) -- Pretty much everyone in Washington agrees that the tax code is complicated, inefficient and -- in general -- a major drag.

Perhaps the best chance for reform is a 2012 election that delivers a mandate of change to lawmakers.

Every presidential candidate has a plan -- and they vary from a series of mild tweaks to major overhauls.

In general, the Republican plans are more aggressive, but would result in lower revenue levels that would have to be offset with spending cuts if soaring deficits are to be avoided.

Meanwhile, President Obama is the only candidate talking about raising taxes.

CNNMoney breaks it down.

Ron Paul: The Texas congressman, who has attracted an enthusiastic following of young people and libertarians, wants to repeal the 16th amendment to the Constitution, which established the government's right to tax income.

"As president, Ron Paul will support a Liberty Amendment to the Constitution to abolish the income and death taxes," his website says. "And he will be proud to be the one who finally turns off the lights at the IRS for good."

He would immediately repeal capital gains taxes, which the candidate says "punish you for success" and "interfere with your efforts to hedge against inflation by purchasing gold and silver coins."

He would repeal the 1993 Social Security tax increase, and work in the long run to exempt Social Security benefits from taxation. Paul would drop the corporate tax rate to 15%.

The 2012 tax and spending wars

While he would like to move to a flat tax or fair tax, Paul also suggests something of a back-up plan:

"Restraining federal spending by enforcing the Constitution's strict limits on the federal government's power would help result in a 0% income tax rate for Americans," his website says.

Mitt Romney: The former Massachusetts governor's plan for the tax code is the least aggressive of the Republican candidates still in the race.

The plan would get rid of taxes on interest, dividends and capital gains for taxpayers who make less than $200,000. It also calls for an elimination of the estate tax, and a reduction in the tax rate paid by corporations from 35% to 25%.

Romney wants Americans to pay lower income taxes, but hasn't said what the new rates will be, what the bracket structure will look like or when he wants them to take effect.

But in the near-term, he would maintain current tax rates on income.

Newt Gingrich: The former speaker wants to add to the current tax code by putting an optional 15% flat tax on income in place, with a $12,000 per-person deduction. And Gingrich would like to eliminate the estate and capital gains taxes.

For businesses, Gingrich wants to reduce the corporate tax rate from 35% to 12.5% -- a move that would take the rate from one of the highest in the industrialized world to one of the lowest. He would also allow for the full expensing of capital expenditures.

Rick Santorum: The conservative former senator from Pennsylvania would reduce the number of income tax brackets from six to two (10% and 28%) and triple what his campaign identifies as the personal deduction that parents can claim for their children.

Obama wants cheaper pennies and nickels

Santorum would also eliminate the so-called marriage penalty, which often causes two-earner couples to owe more in federal income taxes than if they filed as single individuals.

In addition, he would eliminate both the Alternative Minimum Tax and the estate tax. And he would reduce the capital gains rate from 15% to 12%. For businesses, he would cut the corporate income tax rate in half to 17.5% and eliminate it entirely for manufacturers.

Barack Obama: The president has some ideas of his own for the tax code. Instead of less revenue, he wants more.

He wants to raise taxes on those making more than $250,000 by letting the Bush tax cuts expire for top earners. He wants to limit deductions for the wealthy and make an expanded college tax credit permanent.

The president would raise the rate on long-term capital gains -- currently 15% -- to 20% on those making more than $200,000 ($250,000 if married filing jointly).

While Obama opposes eliminating the estate tax, he would like to increase the exemption level to $5 million and lower the top rate to 35%, a more generous level than would be the case under current law.

And he wants to institute a so-called Buffett Rule to ensure that those making more than $1 million pay their "fair share," which President Obama has defined as paying at least 30% of their income in taxes. But details on that proposal are pretty thin.

Obama would also like carried interest to be taxed as ordinary income, which means fund managers would pay more than double the rate they currently pay on a portion of their compensation.

He would also limit itemized deductions for high-income households, make permanent the expansion of a low-income tax credit and make the expanded HOPE credit permanent. To top of page

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