15% tax rate for businesses

[StarTrekDoc]

Doc example moving to Scorp made it on NPR this morning --   of course didn't mention the lawyers, just the highly paid NY doctor.

http://www.npr.org/2017/04/27/525833254/different-economic-perspectives-on-trumps-tax-outline

 

[wideopenspaces]

pulmdoc wrote:

Trump wants the 15% rate to apply to pass through entities as well, which obviously would affect many physicians. Kansas should be a major warning about what will happen; they eliminated state income tax for pass throughs, which led everybody and his dog to reorganize as a passthrough, and state revenue crashed. There was “growth” in the creation of LLC’s but not actual tangible growth to offset the loss of revenue.

There are good reasons to redo the corporate tax code to lower the corporate tax rate in exchange for cutting exemptions, but growth is not one of them.

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yes, I think this article sums up the issue. i really hope this doesn't pass.

http://www.slate.com/blogs/moneybox/2017/04/26/donald_trump_s_tax_plan_would_turn_the_whole_u_s_i nto_kansas.html

[jhwkr542]

wideopenspaces wrote:

pulmdoc wrote:

Trump wants the 15% rate to apply to pass through entities as well, which obviously would affect many physicians. Kansas should be a major warning about what will happen; they eliminated state income tax for pass throughs, which led everybody and his dog to reorganize as a passthrough, and state revenue crashed. There was “growth” in the creation of LLC’s but not actual tangible growth to offset the loss of revenue.

There are good reasons to redo the corporate tax code to lower the corporate tax rate in exchange for cutting exemptions, but growth is not one of them.

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yes, I think this article sums up the issue. i really hope this doesn’t pass.

http://www.slate.com/blogs/moneybox/2017/04/26/donald_trump_s_tax_plan_would_turn_the_whole_u_s_i nto_kansas.html

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Yay, KS! Our state motto should be "There's no such thing as bad publicity!"

[TheGipper]

The goal here should be to set the top marginal personal income tax rate equal to the rate for pass through businesses, maybe 20-25% to prevent tax avoidance shenanigans and set the corporation rate at some % below that to make up for double taxation with dividends.

Or the IRS could just zero the corporate rate and tax all businesses and people the same in every manner.

[StarTrekDoc]

Ross Perot reincarnate!      Flat tax and rid of all deductions.

Agree though, less complex and less tiers  = less time tax avoiding.   But then, H+R would complain!

 

[uptoolate]

In Ontario, the combined federal and provincial small business tax rate is 15% on first 550k of active business income.  Has been a huge boon to MDs and other high income professionals who are allowed to incorporate.  Certainly played a role in my early retirement.

[Drsan1]

That is exactly what I was wondering, would the 15% tax rate have employed physicians incorporating to pay the 15% tax. That would make locum work/private practice look more appealing. Just wondering if anyone would consider quitting and employed position to incorporate.

[TheGipper]

Correct. This could be potentially very harmful to hospitals and academic centers that employ their physicians. They will likely have to pay about 20% more to retain physicians or find a way to pay by 1099 if independent contractors are eligible for the decreased rate.

[Hatton]

I personally do not like the trend that encourages docs to work for hospitals or institutions.  A tax incentive to go start your own practice would be great.  You can be comfortable but not "rich" if you never start a business or join a practice that offers the potential of ownership.  No risk no reward.  "Rich" is an individual definition.

[amphora]

I doubt Trump's tax break will pass and if it does, it will increase the nation debt, do nothing for growth and exacerbate income inequality.

To rehash an earlier point, though the middle class doesn't pay much federal income tax, they do pay state income tax, sales tax and payroll tax.

[ENT Doc]

amphora wrote:

I doubt Trump’s tax break will pass and if it does, it will increase the nation debt, do nothing for growth and exacerbate income inequality.

To rehash an earlier point, though the middle class doesn’t pay much federal income tax, they do pay state income tax, sales tax and payroll tax.

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I agree with your assessment that it will not be revenue neutral over time.  But to say that putting money into taxpayers' hands would do "nothing" for growth is a bit much.  As for income inequality, that is just a term thrown around to incite emotional reaction and additional taxation (on the rich of course).  People who use that term forget about a few very important things.  First, are we supposed to aim for a fixed or narrowing wage gap for some reason?  Is there some evidence that points to an efficient point at which we experience maximal growth, elevation out of poverty, etc?  Second, if in a capitalist society we boost everyone's real income by 20% everyone has 20% more money, but the non-wealthy feel the effects of this even more.  But you've increased the income inequality.  Oh no!  Back to the drawing board.  Lastly, income inequality statements tend to focus on one group - the rich.  If you really want to have an honest discussion about income inequality we can start talking about the numerous things that keep the low wage earners down, much of which has zero to do with the rich.

The middle class may pay state income tax (although this will be disproportionately low given their income and deductions), payroll and sales tax, but this doesn't come close to paying for the services they utilize either at the state or federal level.  The math is even more lopsided for low income earners.

[StarTrekDoc]

I would say we're more socialist than capitalist.   50%+ of budget goes to social security and medicare.  --and BOTH are underfunded at this time.  Probably would be more like 66% of budget if we funded them correctly.   And Trump want's to cull the 3.8% medicare tax out

True, it's not simply taxation an issue in the spread in SES; it's just one of many sticking points.   What we do with our talents is telling.   As a whole, our government can be very inefficient, but there is a place for their role.

[ENT Doc]

StarTrekDoc wrote:

I would say we’re more socialist than capitalist.   50%+ of budget goes to social security and medicare.  –and BOTH are underfunded at this time.  Probably would be more like 66% of budget if we funded them correctly.   And Trump want’s to cull the 3.8% medicare tax out

True, it’s not simply taxation an issue in the spread in SES; it’s just one of many sticking points.   What we do with our talents is telling.   As a whole, our government can be very inefficient, but there is a place for their role.

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Socialism vs capitalism isn't defined by the percent of our budget that is spent on healthcare and retirement payments or their fundedness status.  Soc Sec/Medicare/Medicaid are indeed responsible for 66% of our spending (and projected to grow) already.

[ENT Doc]

Another point about the wage gap is that there is an implicit assumption that these are two static groups where one is conducting evil open the other.  In fact, these groups change over time.  For example, 56% of households will be in the upper 10% at some point in their lifetimes.  Of the top 1%, only 13% do it for over 1 year in a 10 year time frame.  So these are moving groups where one aspires to and often achieves the other.  Getting hot and bothered about the rich in this debate is like shooting yourself to some degree.  Further, there are more head-of-household earners working full time and year round in the top 5% than in the bottom 20%.  Why is it a surprise that a disparity grows at the extremes?  When the government creates such distortions with its handouts where the marginal utility of work is less than the cost, why bother?  The point is, the notion of income inequality as something to be loathed as a single metric ignores the realities that underpin the crap politicians spew from their mouths.

[The White Coat Investor]

Drsan1 wrote:

Hello, all! I wanted to get people’s input or thoughts about the possibility of a 15% tax rate for businesses.

First do people think this will really happen?

Second will this change how anybody does anything, for example would anyone consider becoming an independent contractor/locums doc bacause of this. 15% sounds a lot better than 33% as an employed physician.

Third how do people feel that are already independent contractors about this, and how will it effect you. Will this be like a significant pay raise?

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1. No.

2. Heck yes. Huge changes in the workforce would take place.

3. Yes. It would be awesome for me personally. Actually, it probably wouldn't change my life much, but I'd give a lot more to charity.