(Reuters) - Vice President Joe Biden
will debate Republican vice presidential candidate Paul Ryan on Thursday in a
match-up where taxes will likely return to the spotlight after last week's first
presidential debate.
Ryan, chairman of the House of Representatives Budget Committee, has a string
of earlier budget and tax proposals that could come under fire by Biden. The
Democratic vice president is known more for his foreign policy experience, but
he has played a major role in negotiating fiscal deals in the Obama
administration.
Below is a brief summary of each campaign's recent positions and other tax
issues that may come up.
BUSH-ERA TAX RATES
The most pressing challenge facing Congress is the December 31 expiration of
lower income and investment tax rates enacted under President George W. Bush in
2001 and 2003.
President Barack Obama supports keeping rates the same for families making
less than $250,000 annually. For income above that level, he favors raising the
top two tax brackets to 36 percent and 39.6 percent.
Those rates are now at 33 percent and 35 percent.
Republican challenger Mitt Romney has called for extending all the Bush-era
rates and wants to further cut all rates by 20 percent.
That has led to criticism that such cuts would cost $4.8 trillion over a
decade, and debate over how Romney would make up the lost government revenue
without adding to the deficit.
INVESTMENT INCOME
Obama wants to raise the dividend tax rate to match the ordinary income tax
rate for the two highest income brackets. He also backs raising capital gains
taxes to 20 percent from 15 percent for those brackets.
Romney wants to eliminate these taxes for households making less than
$250,000 a year. In earlier budget proposals, Ryan has backed killing the
investment taxes for all income groups, including the wealthy who tend to
benefit most.
The 15 percent current investment tax rates for most taxpayers also expire on
December 31.
Obama backs raising tax rates paid by private equity and other financiers,
known as "carried interest," to the level of ordinary income tax rates, from
their current 15 percent tax treatment.
Romney, whose net worth is estimated at up to $250 million after co-founding
the private equity firm Bain Capital, has hedged on the issue. But nearly every
Republican lawmaker including Ryan has voted against that change.
TAXING THE WEALTHY
Obama has also endorsed a "Buffett rule," named for billionaire investor
Warren Buffett, to require households making more than $1 million a year to pay
at least 30 percent of their income in taxes.
Both candidates back scrapping the alternative minimum tax, which puts a
floor on the amount of taxes the rich pay.
Romney has said he will not raise the share of taxes paid by the wealthy, but
he would target some of their tax deductions, perhaps setting a hard dollar
cap.
TAXING THE POOR
Obama backs many tax credits used by the poor and working class such as the
earned income tax credit and the child credit.
Republicans have criticized the expansion of many of the tax credits for
poorer Americans and have tried to end some backed by Obama.
Romney ran into trouble when a secretly recorded videotape surfaced of him
saying that 47 percent of voters were dependent on government and unlikely to
support him.
Ryan in earlier budget plans has proposed eliminating nearly all special tax
credits in exchange for lower tax rates.
CORPORATE TAXES
Obama backs cutting the top corporate income tax rate to 28 percent from 35
percent. Romney and many Republicans have proposed a rate cut to 25
percent.
Obama has offered a long list of corporate tax breaks to end, ranging from
inventory accounting to interest on overseas profits and tax provisions
benefiting oil and gas companies.
The president has said he wants to keep the current "worldwide" system of
taxation where companies pay taxes on all profits, including those earned
overseas.
Romney wants to exclude profits earned outside the United States from
taxation, in a change to a system known as "territorial."
TAX CODE OVERHAUL
Obama and Romney say they back a complete tax code overhaul, but both have
been vague on the thorny details.
Neither has explicitly embraced some bipartisan plans that call for lowering
rates across the board in exchange for politically painful cuts to treasured tax
breaks.
Romney backs the traditional mantra of lower rates and broadening the base of
taxpayers, but has been less than specific on how he would achieve
that.
Obama has not proposed a major tax overhaul either. And some Democrats say
there is not enough revenue to lower rates for the wealthiest.
A major revamp of the tax code has not been done since 1986, under Republican
President Ronald Reagan with a Republican Senate and a Democratic
House.
(Reporting By Kim Dixon; Editing by Xavier Briand)