Sunday, April 30, 2017 8:21:08 AM
Under the Trump Tax Plan, We Might All Want to Become Corporations
APRIL 28, 2017
Corporations are people, Mitt Romney once told us
That’s because of a huge loophole implied by the broad tax ideas the administration recently released. Unless revised in actual legislation, the plan would give millions of Americans the opportunity to cut their taxes by essentially turning themselves into small business entities.
This mind-bending curiosity of the tax code could undermine the very idea of a job as we know it — or, arguably, accelerate a shift that has been underway for years.
The opportunity to game the system arises from the huge gap between the tax rate paid on individual income — up to 39.6 percent now, or 35 percent under the Trump plan — and the low rate on business income the president proposes, of 15 percent. He seeks to apply that rate to all businesses, including “pass-through” organizations such as limited liability companies and S corporations, and that is where the opportunity for games arises.
[...]
Higher earners have even more to gain from this trick. Many of the costs attached to paying an accountant or a lawyer to set up the structure are fixed, perhaps on the order of several hundred dollars, whereas the potential gains are unlimited and rise with one’s income. And of course people in higher tax brackets gain more from reducing their rate to 15 percent.
This is no abstraction. After Kansas eliminated its state tax on pass-through income, the number of people taking advantage of the exemption soared, leading to [ https://taxfoundation.org/testimony-reexamining-kansas-pass-through-carve-out/ ] hundreds of millions of dollars in lost revenue for state coffers.
[...]
https://www.nytimes.com/2017/04/28/upshot/under-the-trump-tax-plan-we-might-all-want-to-become-corporations.html [with comments]
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http://investorshub.advfn.com/boards/read_msg.aspx?message_id=130899999 and preceding and following
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=130929321 and preceding and following
APRIL 28, 2017
Corporations are people, Mitt Romney once told us
[ http://www.youtube.com/watch?v=KlPQkd_AA6c ]. But if the Trump administration’s tax plan were to become law, in the future a whole lot of people may just become corporations.
That’s because of a huge loophole implied by the broad tax ideas the administration recently released. Unless revised in actual legislation, the plan would give millions of Americans the opportunity to cut their taxes by essentially turning themselves into small business entities.
This mind-bending curiosity of the tax code could undermine the very idea of a job as we know it — or, arguably, accelerate a shift that has been underway for years.
The opportunity to game the system arises from the huge gap between the tax rate paid on individual income — up to 39.6 percent now, or 35 percent under the Trump plan — and the low rate on business income the president proposes, of 15 percent. He seeks to apply that rate to all businesses, including “pass-through” organizations such as limited liability companies and S corporations, and that is where the opportunity for games arises.
[...]
Higher earners have even more to gain from this trick. Many of the costs attached to paying an accountant or a lawyer to set up the structure are fixed, perhaps on the order of several hundred dollars, whereas the potential gains are unlimited and rise with one’s income. And of course people in higher tax brackets gain more from reducing their rate to 15 percent.
This is no abstraction. After Kansas eliminated its state tax on pass-through income, the number of people taking advantage of the exemption soared, leading to [ https://taxfoundation.org/testimony-reexamining-kansas-pass-through-carve-out/ ] hundreds of millions of dollars in lost revenue for state coffers.
[...]
https://www.nytimes.com/2017/04/28/upshot/under-the-trump-tax-plan-we-might-all-want-to-become-corporations.html [with comments]
---
(linked in):
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=130899999 and preceding and following
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=130929321 and preceding and following
Greensburg, KS - 5/4/07
"Eternal vigilance is the price of Liberty."
from John Philpot Curran, Speech
upon the Right of Election, 1790
F6
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