It's a great deal for the Donald Trumps and Jerry Joneses of the world.
by Justin Fox
September 28, 2017, 11:18 PM GMT+10
Not the little guy. Photographer: Matthew Stockman/Getty Images
Here's an interesting passage from the "Unified Framework for Fixing Our Broken Tax Code" released Wednesday by the White House and Republican congressional leaders:
- The framework limits the maximum tax rate applied to the business income of small and family-owned businesses conducted as sole proprietorships, partnerships and S corporations to 25%. The framework contemplates that the committees will adopt measures to prevent the recharacterization of personal income into business income to prevent wealthy individuals from avoiding the top personal tax rate. -
These are what are called pass-through entities. Most are in fact small. But many aren't, and most of the income earned by pass-through entities goes to the big ones. Consider one partnership that's been in the news this week, the Dallas Cowboys Football Club Ltd., which has annual revenue of $840 million and an operating profit of $350 million, according to Forbes. Jerry Jones, the primary owner, has a net worth of $3.8 billion, according to the Bloomberg Billionaires Index -- which puts him about $100 million short of the global top 500 but does make him wealthier than 99.9999 percent of Americans (among them President Donald Trump, whose net worth Bloomberg puts at $2.9 billion). Overall, 69 percent of income from partnerships, which includes limited liability companies, and 66.9 percent of S corporation income goes to those in the top income percentile, the Treasury Department estimated in 2015. (The percentage for sole proprietorships was just 16.2 percent.)
Aaron Krupkin and Adam Looney Monday, May 15, 2017
The overwhelming majority of businesses in the U.S. are not C-corporations subject to the corporate tax. Rather, most businesses—about 95 percent—are “pass-throughs,” which have their income “pass through” to their owners to be taxed under the individual income tax.
Pass-through businesses include sole proprietorships, partnerships, and S-corporations. Because these businesses’ decisions are affected by both corporate and individual tax systems, earn a majority of U.S. business income, range in size and complexity, and operate economy-wide in a variety of industries, they represent unusual challenges to tax reform.
Both the Trump administration and the 2016 House Republican tax reform plan propose large reductions in taxes paid on business income, including taxes paid by owners of pass-through businesses. For instance, the Trump tax plan proposes reducing the corporate tax rate from 35 percent to 15 percent and the top tax rate on income earned from pass-through business from 39.6 percent to 15 percent.
Authors
Aaron Krupkin Senior Research Analyst - Urban-Brookings Tax Policy Center
Adam Looney Senior Fellow - Economic Studies, Urban-Brookings Tax Policy Center
To help understand the policy considerations surrounding the taxation of pass-through businesses and the implications of potential reforms, here are nine facts about pass-throughs and the current U.S. approach to taxing business.
5. Pass-through businesses pay lower tax rates than C-corporations. https://www.brookings.edu/research/9-facts-about-pass-through-businesses/#fact5 The gap between the lower tax rate on pass-throughs and the higher rates faced by C-corporations creates a major incentive for businesses to un-incorporate and to organize as pass-throughs.
6. The multitude of business types encourages inefficient tax avoidance. https://www.brookings.edu/research/9-facts-about-pass-through-businesses/#fact6 With so many options to choose from when determining how to structure a business and whether to distribute business income as profits, wages, or capital gains, business owners have considerable incentive and ability to avoid tax.
7. The growth of pass-through businesses has eroded corporate and payroll revenues. https://www.brookings.edu/research/9-facts-about-pass-through-businesses/#fact7 If the relative shares of pass-through and C-corporate activity were held at 1980 levels, the average tax rate on business income in 2011 would have produced at least $100 billion in additional revenue in 2011 alone.
Donald Trump's Pants on Fire claim about the estate tax, small businesses and farms
"Trump's tax plan lies. Boon to top 1%."
Ending the estate tax would "protect millions of small businesses and the American farmer." — Donald Trump on Wednesday, September 27th, 2017 in a speech in Indianapolis
By Louis Jacobson on Thursday, September 28th, 2017 at 11:54 a.m.
[...]
Our ruling
Trump said that ending the estate tax would "protect millions of small businesses and the American farmer."
That’s a ridiculously high estimate. Only 5,460 estates even pay the tax each year, according to a credible estimate, and of those, about 80 represented small businesses or farms. We rate the statement Pants on Fire.
fuagf, and all -- here's that Hardball segment (MSNBC is quite relentless in getting unofficial YouTubes of its content taken down) (which is why I've pretty much given up posting/trying to find unofficial YouTubes of noteworthy MSNBC segments of which official YouTubes haven't been provided):
*
Twitter efforts to fight Russian accounts called ‘inadequate’
Hardball with Chris Matthews 9/28/17
Today, the House and Senate Intelligence Committees met behind closed doors with representatives from Twitter. Duration: 10:41
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