Which Presidential candidate makes the most sense for Maryland business owners?  If tax policy alone drives business owners to the voting booth in the 2016 election then the pendulum swings to Donald Trump.

Why?  While bold, Donald Trump’s plan would help existing businesses continue to flourish and help new business make their way in the economy.  The viable plans from the other leading candidates (based on latest poll numbers) don’t make much sense at all – at least from a business growth perspective.  What do some of the other candidates propose? Ted Cruz’s plan puts many tax professionals in jeopardy, Hillary Clinton’s plan makes staying in business harder and Bernie Sanders’ plan will put everyone out of business.  That leaves Trump – and his plan is straightforward and pro-growth.

With the economic pressures facing the country, an increasing debt burden, volatile markets, a shrinking labor force, increasing costs of health care and entitlements and rising turmoil abroad, taxes matter.  Our tax policy is hugely important since it is a primary driver of economic growth and job creation, in addition having a real effect on the entrepreneurial culture of this country.  Increasing taxes encourages disinvestment, savings deficits and aggressive financial behavior.   Trump has the strongest pro-business tax plan.

Cruz’s plan is unbelievably simple – maybe too good to be true. A simple 10% flat tax (applied above a standard deduction and exemption).  This means that a family of four would pay a flat 10% on income over $36K.  The corporate tax rate would be lowered to a flat 16%. Most deductions would be eliminated (the home mortgage and charitable deductions would remain in place).  Tax filings would be reduced to a postcard.  While this plan is pro-growth, it does not appear viable in today’s political climate.

Where Cruz’s plan is very simple, Clinton’s plan is extraordinarily complex.  Clinton’s plan adds at least two tax brackets for income tax, six for capital gains, reduces the benefits of deductions, increases the estate tax, and adds a hodgepodge of miscellaneous tax credits that benefit special interest groups.  The top rates increase to 47.4% for all income.  This tax plan does not encourage growth.

Sanders’ tax plan is not overly complicated – but certainly expensive.  The top rates for families making over $250K increase to 60% – on ordinary income and capital gains.  Maryland residents could pay almost 70% tax on all their income!  He also proposes increases to corporate taxes, impose taxes on securities transactions, adds a carbon tax, and these increases still cannot come close to paying for the free college and health care, etc. that he proposes.  Under Sanders’ plan, private enterprise would effectively exist solely to fund the costs of government.

And finally we get to Trump.  His plan has four brackets, with a top marginal rate of 25% on ordinary income over $300,000 (for married couples) and capital gains from 0% to 20% using the same brackets.  All deductions are eliminated except the mortgage and charitable deductions.  The corporate tax rate is reduced to 15%.  He proposes to simplify the tax code and reduce loopholes – which is a desirable goal.  Judging the candidates based solely on tax policy (and I am not opining on any other issue in this forum) leads business owners to an unlikely conclusion – Donald Trump for President?

David S. Rosen, Esq., CPA is director of tax services for Rosen, Sapperstein & Friedlander, LLC, a business consulting and accounting firm with offices in Maryland, Washington, D.C., and Florida.  He can be reached at davidr@rsandf.com.