Rick Santorum presents a program of claimed simplification for the individual tax payer. So let’s check out how the Senator’s plan might affect our 20 year, $200,000 investment. Take a look at the footnotes on each column to see a brief explanation. Also feel free to too look at
RickSantorum’s “DefenderoftheTaxpayer” page which outlines his taxation theory. Remember, the following numbers are just to help give you an idea of how a particular candidate’s plan could affect your investments. We have also put in the numbers which reflect the current tax scenario.
|
Candidate
|
Initial Investment
|
Tax on Gains
|
Amount @ year 20
|
Tax on Withdrawal
|
Net withdrawal
|
Estate Tax
|
Net Inheritance
|
|
Obama
|
$200,000
|
0%
|
$400,000
|
|
$340,000
|
|
$340,000
|
|
Santorum
|
$200,000
|
0%
|
$400,000
|
|
$352,000
|
0%
|
$352,000
|
In summary, Senator Santorum seeks to reduce, but not eliminate capital gains taxation, while eliminating the estate tax.
[1]This assumes that we are in the 28% tax bracket
[2]Estate taxes currently are only applied on the amount over $5,000,000
[3] One of the tricky parts here is that Santorum wishes to eliminate all but two tax brackets, 10% and 28%, and we do not know which of these two brackets our hypothetical investor might fall, or how their placement would affect their capital gains tax rate, if at all.