Donald Trump’s revamped tax plan stands in stark contrast to his rival Hillary Clinton’s plan, although many of the differences go back to the traditional split between the Republican and Democratic approaches to tax reform.

“In terms of the big picture, it tends to be traditional Republican vs. traditional Democrat on the tax side,” said Bill Smith, managing director of CBIZ MHM’s National Tax Office, who has compiled an infographic contrasting the two candidates’ tax plans.

“Hillary is not surprising,” he noted. “Most of what she thinks is kind of in alignment with what President Obama has been putting forth in his budget every year and getting nowhere with. There’s not that much that’s new.”

Trump’s latest plan changes the tax rates he originally proposed and refines his approach to taxing carried interest income earned by hedge fund managers.

“Initially he was talking about it as if he had come up with the idea, whereas it has been pushed by everybody for years and years on both sides of the aisle,” said Smith. “Under his original plan it’s either going to be a tax break for them if carried interest is covered under his 15 percent pass-through business tax, and then it would be an even lower rate than they were paying, or if it was taxed as ordinary income, assuming they were paying 23.8, and he came in at 25 percent, it was only a bump up of 1.2 percent. The fact that he was talking about carried interest at all, given the rest of his plan, seemed kind of silly to me. Now that he has gotten with the Republican powers that be and upped the brackets to 12, 25 and 33 [percent], it’s a much more important question about how that is going to be taxed, if it’s going to be subject to the 15 percent business income flow-through rate or whether it will truly be taxed as ordinary income, because then it would be a significant increase if it’s subject to the 33 percent.”

Clinton wants to tax carried interest at ordinary income rates as opposed to the lower capital gains rate, a frequent proposal by the Obama administration and Democrats in Congress.

“Hillary wants to tax carried interest also, but she’s not changing the tax rate, so that would be a significant impact,” said Smith.

Trump had originally proposed to significantly increase the standard deduction to $25,000 for individuals and $50,000 for couples filing jointly, but it’s unclear whether that proposal remains in the plan he unveiled this week (see Trump Tax Plan Seen as Boon for Rich, Question Mark for Others).

“It would essentially quadruple the standard deduction,” said Smith. “Then that would be a boon to some of the lower- and middle-class taxpayers, but most of what he’s doing tends to benefit the wealthy, and most of what Hillary is doing takes away from the wealthy. She’s got the Buffett tax, and she’s got the 4 percent surcharge on adjusted gross income over $5 million, and she wants to scale back on the estate tax exemption and increase the maximum rate on the estate tax. Donald Trump wants to repeal it. He wants to limit the pass-through income to 15 percent, and Hillary doesn’t have any changes there.”

Trump has also proposed to allow parents to deduct the cost of childcare expenses, although the proposal has been criticized for only benefiting parents who earn enough to write off the expenses from their taxes.

On the business tax side, Trump is proposing a top rate of 15 percent. “It wasn’t exactly clear what he meant about that, but it seems clear now that any K-1 income you get on pass-throughs is going to be limited to a maximum rate of 15 percent,” said Smith. “To me that’s the biggest single change. It’s a sort of sea change in the way things are taxed in his plan. He’s basically trying to keep a consistent business rate, if you will. That’s been part of the fight historically between Democrats and Republicans. They are generally in line with lowering the corporate rate, maybe not the same amount, but Republicans said we’re not going to let you do that piecemeal because so much business is done through pass-throughs that you have to deal with individual rates at the same time. The Donald has done that with his proposal that if you’re getting basically active trade or business income on a K-1, that’s also going to be limited to 15 percent when you get it. That’s huge and Hillary has no changes on that side. Her individual rate still stays at 39.6. She still has the Net Investment Income Tax on top of that. So she’s not making any major changes in that respect.”

For more details on the two plans, Wolters Kluwer Tax & Accounting has produced a tax briefing contrasting the Trump and Clinton tax plans.

The implications of the proposed tax reform plans could be big for tax practitioners and their clients after the election. BDO USA surveyed a group of American tax directors earlier this year, and found that 77 percent of them believe tax reform will pass under a Republican president, in contrast to 33 percent who expect tax reform to pass if the next president is a Democrat. With Republicans currently in control of both the House and Senate, that opinion should not be too surprising. BDO’s survey also found that one out of five tax directors surveyed consider planning for tax reform under the next president to be their top tax concern for 2016. 

Tax professionals have good reason to anticipate the results of the November election to have a “yuuge” impact on the clients they service.