Obama-Romney: Where They Stand on Taxes

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There may not be a more contentious issue between President Barack Obama and Mitt Romney in this election than taxes—and there may be no greater difference on where the candidates stand.

Here's what each of them have said publicly they would do about taxes.

Obama: In his first term, Obama and Congress created significant tax cuts for families and businesses, but some were temporary.

If re-elected, Obama has said, he would like to raise taxes on the wealthy and ensure they pay 30 percent of their income, which he says would help reduce the budget deficit. (Read More: What is the Deficit)

Obama said he supports extending Bush-era tax cuts for everyone making under $200,000, or $250,000 for couples. He had agreed in 2010 to a two-year extension of the lower rates for all taxpayers.

But that extention ends on Dec. 31, and Obama has said he would let the top two tax rates go back up 3 to 4 percentage points to 39.6 percent and 36 percent—and raise rates on capital gains and dividends for the wealthy.

A Treasury Department report says Obama's proposal to let the Bush tax cuts expire for top earners would hit only a tiny fraction of all small businesses—but it includes nearly 1 million companies.

Other taxes going up under Obama would be to help cover Medicare costs from the Affordable Health Care Law—with a tax on highest-value health insurance plans. (Read More: What is Medicare?)

Obama has said he would replace the Alternative Minimum Tax (AMT) with the "Buffett Rule," named after billionaire investor Warren Buffett. (Read More: What is the AMT?)

The AMT was originally designed to keep top wage earners from taking too many deductions, but it currently captures many middle-class families. The Buffett rule holds that millionaires shouldn't have a lower effective tax rate than anyone else—and that they should pay at least 30 percent of their income in federal taxes. (Read More: Warren Buffett Watch)

Obama would continue a 15 percent tax rate on dividends and capital gains for families making less than $250,000 a year.

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When it comes to business, Obama would reduce the top corporate rate to 28 percent from 35 percent. Obama has also called for new tax codes to encourage investment at home and discourage the offshoring of jobs and factories.

To do that, Obama has proposed that a corporation's profits from foreign subsidiaries would face a minimum tax rate, with U.S. taxes tacked on if taxes in the host nation don't hit the level by themselves.

This happens now only when a corporation decides to "repatriate" profits, or move them from the host country back to the U.S. Obama would then offer businesses a tax credit to move operations to the U.S. while tax deductions for shifting operations abroad would be eliminated.

As for the estate tax, Obama said he would reinstate the 2009-level rate of 45 percent after a $3.5 million exemption on assets passed to heirs.

Obama has said that higher taxes on the rich will not stifle economic growth and that both tax hikes and spending cuts to achieve long-term deficit reduction.

Romney: Romney says lower tax rates for all taxpayers will get the economy moving and help with job creation. And he has said his tax proposals will not enlarge the federal deficit.

To achieve that goal, Romney has said he wants a permanent extension of the Bush-era tax cuts for all incomes. He would also drop all tax rates further by 20 percent—bringing the top rate down to 28 percent from 35 percent and the lowest rate to 8 percent instead of 10 percent.

Romney said he would curtail deductions, credits and exemptions for the wealthiest and he would end the ATM for individuals. Romney is against the "Buffett Rule," saying it "encourages the most complicated and convoluted tax-avoidance schemes at tremendous cost to all involved."

Romney has said that he would eliminate capital gains tax for families making below $200,000. He has stated often that he would close tax loopholes but has not said which loopholes he means.

Romney would cut the top corporate rate to 25 percent. And he said he would seek to encourage domestic investment by opening the door to firms that want to bring their profits back to U.S. shores.

As for the estate tax, Romney says he would eliminate it once and for all.