Posted on 12/31/2017 2:27:17 PM PST by spintreebob
The tax plan that President Trump signed into law last week creates one of the largest new loopholes in decades: a 20% deduction for “pass-through income.”
Pass-through income is business income that is immediately “passed through” to the owner’s personal tax return, thereby avoiding the corporate income tax. Proponents of the Republican tax plan claim the cut benefits small businesses, but that’s a red herring. In reality, the new deduction disproportionately benefits the wealthy, penalizes workers and, in part because it is so complex, will ultimately reward those who can afford the best tax advice.
The new deduction could have profound effects on the American workplace over time. It essentially requires employees — most workers — to choose between benefits such as employer-based healthcare and the deduction. By creating a strong incentive for employees to give up these benefits and become independent contractors, it could further erode job, health and retirement security.
(Excerpt) Read more at latimes.com ...
Wrong. Not developed over centuries. In IRS Vs Union Oil Company the IRS won and was able to impose a very complex set of regulations on employers to prevent voluntary contracts between people... and the theory that voluntary contracts would defraud the government of the government’s money.
That Union Oil decision still dominates, expecially in IT and skilled professions. It inserts a great inefficiency in IT shops.
Don’t confuse the liberals with facts and logic.
The LAT author is a total maroon.
pass-through tax reform is hardly a loophole: it’s a deliberate part of the new tax reform bill to provide SOME of the tax reductions to small businesses that were provided to the big C corporations.
And this small-business tax reduction has absolutely NOTHING to do with employees of these small businesses or their tax rates. In point of fact, most of these small businesses don’t even have employees anyway: most are sole proprietorships or family businesses where the “employees” are family members.
Forbes has an excellent article about how small “pass-through” businesses will benefit, so if you have a small “pass-through” business, this is an excellent read. And as Forbes explains, this is not just for S corps, but also for all other forms of pass-through businesses, including sole proprietorships, partnerships, professional service corporations and LLCs.
BTW, this stuff isn’t grotesquely complicated as the LAT maroon claimed, and should be easily handled automatically by H&R Block Tax Software or TurboTax, and the small amount of extra complexity will essentially be transparent to the small business people doing their taxes that way.
Figures. The la times.
The new law taxes only 80% of what’s passed through. The other 20% is not taxed at any level, corporate or individual.
So it encourages people to start businesses? Cool.
Today’s LAT Headline, GOP faces Democratic Wave in 2018!
I thought this story was flying around a week ago.
If the GOP starts following President Trump’s lead, I have no idea what the Rats will run on next November.
Some Ideas:
1. You’re too stupid to know what to do with the money the Trump Tax Cuts saved you!
2. Illegal Invaders have more Rights than you do, but your White guilt is to blame!
3. We miss ISIS!
4. Screw Israel!
5. You would Vote for us if you lived in North Korea!
6. Venezuela! Never mind...
7. Jobs, you don’t need no stinking Jobs!
I might start another business - 3D printing of model railroad accessories. (I’m thinking of doing the Phoenix Life building, the Charter Oak Mall, a few railroad stations, the East Haddam bridge, Goodspeed Opera House and other accessories).
Cool idea! Will you do your own CAD work?
Yes...I do have CAD on my computer...I just hope it be a success...
What you describe is considered personal use and would not be deductible. see #3 below
What is a day of personal use?
A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons.
1 You or any other person who owns an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). However, see Days used as a main home before or after renting , later.
2 A member of your family or a member of the family of any other person who owns an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc.), and lineal descendants (children, grandchildren, etc.).
3Anyone under an arrangement that lets you use some other dwelling unit.
4Anyone at less than a fair rental price.
https://www.irs.gov/publications/p527
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Anything that gets employees off of “healthplans” and away from doctors and their dangerous and ineffective drugs has to be a stupendously good thing!
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Leftist “class” warfare rears its marxist head on Freerepublic!
How surprising.
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IOW, its nothing new.
Yes, Nephew the Lawyer thought about that - we were joking.....
Right — thanks. My problem is that if I operate as an S-Corp then I have to register twice with my licensing boards (as an individual and as a corporation), and my public sector clients have much more stringent auditing requirements. I will probably do this at some point, but only after I bring on partners and/or hire permanent employees.
Not a tax expert but it seems to make sense.
Call me when the more than 50 % start paying taxes
How is ending the practice of double taxation creating a loophole?
That's if you're a C Corp. The new law applies to pass-through entities which don't pay tax (S Corps, partnerships, LLCs, etc.). The partners who get pass-through income will now be taxed on only 80% of it.
If it's a pass-through entity, there is no tax at all at the corporate level.
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