Tax Reform Framework

[jfoxcpacfp]

StarTrekDoc wrote:

Ha;  conveniently lawyers not mentioned in that bunch

Click to expand...

They would be included, also  . This was just an interview, not a testimony, and just threw out a few examples. Although...lawyers might pollute the rarefied atmosphere, present company on this forum excluded  

[Zaphod]

jfoxcpacfp wrote:

Listened to Pat Toomey interview this morning and he said any corporate tax reduction will exclude professional services. He specifically mentioned doctors, accountants, and hedge fund managers – I’m in rarefied company.

While I think there is a lot of tweaking to be done, I’m cautiously optimistic.

Click to expand...

Will they exclude them categorically like by their job type number, or just those in real corporations. Would be a bummer if categorical.

NVM, I dont get it, that forbes article says any wages paid out would still be ordinary. Sure shifting but this thing looks terrible and not long for reality.

[Craigy]

ScientistPhysician wrote:

I’ve never understood why so many docs have historically backed republican tax plans.  Apparently they enjoy paying high taxes on wage income to subsidize low capital gains taxes for people who are already wealthy.

Click to expand...

The alternative is to back democrat tax plans, which historically only increase taxes, sometimes dramatically, and generally involve increases across the board.

For the tax-conscious high-income physician, the only vote is the republican vote, whether or not the republicans put it to good use.  They're pretty good at wasting an opportunity but every now and then they come through.

Realistically speaking, even if this tax reform goes nowhere, the Trump victory & republican control of congress translates to maintaining the status quo, which, for the tax-conscious high-income physician, is immensely preferable to the broad tax increases proposed and supported by both 2016 democrat presidential candidates, and virtually every democrat candidate in the modern era.

[jfoxcpacfp]

Zaphod wrote:

jfoxcpacfp wrote:

Listened to Pat Toomey interview this morning and he said any corporate tax reduction will exclude professional services. He specifically mentioned doctors, accountants, and hedge fund managers – I’m in rarefied company.

While I think there is a lot of tweaking to be done, I’m cautiously optimistic.

Click to expand…

Will they exclude them categorically like by their job type number, or just those in real corporations. Would be a bummer if categorical.

Click to expand...

By "real corporations" do you mean PSCs or C-corps with no attached election? By job type number, do you mean NAICS code?

Although, I'm not sure there is enough certainty to comment at this point.

[Craigy]

jfoxcpacfp wrote:

StarTrekDoc wrote:

Ha;  conveniently lawyers not mentioned in that bunch

Click to expand…

They would be included, also  . This was just an interview, not a testimony, and just threw out a few examples. Although…lawyers might pollute the rarefied atmosphere, present company on this forum excluded  

Click to expand...

Lawyers can't be included since about half of congress is made up of lawyers.   

It'll be interesting to see their mechanism to prevent employees from converting to businesses.

[ScientistPhysician]

I think your argument with benefit from just a little bit of nuance. Here is a refresher about the tax choices that we had last year in the US Presidential election:

https://www.nytimes.com/2016/08/13/upshot/how-hillary-clinton-and-donald-trump-differ-on-taxes.html?mcubz=3&_r=0

 

Clinton would have modestly increased income tax by 4% on very high income earners (>$5m/year) and raised AMT to 30% for people with >$1m/year. This would not have affected 99% of doctors. So essential tax rate for vast majority of doctors would have been about the same. However, the relative tax burden on doctors compared to investment income earners would have been significantly decreased.  I don't mind paying my fair share, it just kills me to pay about double what investors make.

 

Income is income, why should the sweat of my brow be taxed higher than the passive returns of an heir/heiress who has accomplished nothing other than to be born to someone who died wealthy?

 

EDIT: I will just add that Clinton's tax plan would have added $1.1 trillion in federal revenue, the republicans will likely drive us even further into debt by at least this much with their tax cut's pay for themselves delusion. The choice for economic sanity in the long run should also count for something.

[hightower]

jfoxcpacfp wrote:

Listened to Pat Toomey interview this morning and he said any corporate tax reduction will exclude professional services. He specifically mentioned doctors, accountants, and hedge fund managers – I’m in rarefied company.

While I think there is a lot of tweaking to be done, I’m cautiously optimistic.

Click to expand...

So much for "simplifying the tax code."  The pass through corporations will continue to flourish (and likely grow because of the reduced tax rate) because there's no way for the IRS to accurately distinguish between labor income and business income.

"The problem is that trying to differentiate between the two could require a lot of detailed work by companies to justify their breakdown of labor versus capital income — and intrusive efforts by the I.R.S. to ensure they follow the rules."

https://www.nytimes.com/2017/09/27/upshot/the-republican-tax-plans-magic-asterisk.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=first-column-region&region=top-news&WT.nav=top-news

[hightower]

amphora wrote:

I think this is dead in the water.

I can’t imagine the the loss of the state tax deduction if Trump counts on support from CA/NY Congressional Republicans. Also the pass through tax break seems designed to specifically give Trump himself a tax break.

Also, this will require 60 votes in order to not end after 10 years.

Click to expand...

The real gift to Trump and other uber wealthy Americans is the elimination of the AMT.  Trump gets hit hardest by this when he does actually pay taxes, so it's no wonder it's first and foremost on his list of priorities.  It's kind of hilarious how blatantly selfish he is.

[hightower]

ScientistPhysician wrote:

I think your argument with benefit from just a little bit of nuance. Here is a refresher about the tax choices that we had last year in the US Presidential election:

https://www.nytimes.com/2016/08/13/upshot/how-hillary-clinton-and-donald-trump-differ-on-taxes.html?mcubz=3&_r=0

 

Clinton would have modestly increased income tax by 4% on very high income earners (>$5m/year) and raised AMT to 30% for people with >$1m/year. This would not have affected 99% of doctors. So essential tax rate for vast majority of doctors would have been about the same. However, the relative tax burden on doctors compared to investment income earners would have been significantly decreased.  I don’t mind paying my fair share, it just kills me to pay about double what investors make.

 

Income is income, why should the sweat of my brow be taxed higher than the passive returns of an heir/heiress who has accomplished nothing other than to be born to someone who died wealthy?

 

EDIT: I will just add that Clinton’s tax plan would have added $1.1 trillion in federal revenue, the republicans will likely drive us even further into debt by at least this much with their tax cut’s pay for themselves delusion. The choice for economic sanity in the long run should also count for something.

Click to expand...

Hit the nail on the head.  It's a joke how backwards our system is.  Doctors get hit especially hard by this system unless you are savvy enough to find a way to either a.) become independently wealthy and live off of your capital gains/dividends (what most of us are striving for) or b.) set up a pass through corporation and pay the reduced corporate rate, which is becoming rarer these days with the corporate take over of healthcare.  Most docs are W-2 employees so our income is heavily taxed with little opportunity for deductions other than the mortgage interest and charitable giving.

Meanwhile Warren Buffett pays only like 17% effective rate and he's worth over 60 billion dollars.  Yet we "cant' afford" to balance the budget and all sorts of other things that would actually benefit society (healthcare, the national parks, infrastructure, renewable energy, etc).

And what's sad is most Americans are blissfully unaware of how uneven the playing field is because they're busily distracted by consumerism.  As long as they can afford to buy a new iphone or giant TV with their tax refund, they're happy as a clam.

[jfoxcpacfp]

hightower wrote:

So much for “simplifying the tax code.”

Click to expand...

I don't recall mentioning this.

[q-school]

hightower wrote:

amphora wrote:

I think this is dead in the water.

I can’t imagine the the loss of the state tax deduction if Trump counts on support from CA/NY Congressional Republicans. Also the pass through tax break seems designed to specifically give Trump himself a tax break.

Also, this will require 60 votes in order to not end after 10 years.

Click to expand…

The real gift to Trump and other uber wealthy Americans is the elimination of the AMT.  Trump gets hit hardest by this when he does actually pay taxes, so it’s no wonder it’s first and foremost on his list of priorities.  It’s kind of hilarious how blatantly selfish he is.

Click to expand...

catch me up.  aren't there complaints over the years that the AMT has crept up and snagged a bunch of so called middle class americans?

we have been over the top of amt for as long as i can remember.  which these days, isn't that long.  

[Zaphod]

q-school wrote:

hightower wrote:

amphora wrote:

I think this is dead in the water.

I can’t imagine the the loss of the state tax deduction if Trump counts on support from CA/NY Congressional Republicans. Also the pass through tax break seems designed to specifically give Trump himself a tax break.

Also, this will require 60 votes in order to not end after 10 years.

Click to expand…

The real gift to Trump and other uber wealthy Americans is the elimination of the AMT.  Trump gets hit hardest by this when he does actually pay taxes, so it’s no wonder it’s first and foremost on his list of priorities.  It’s kind of hilarious how blatantly selfish he is.

Click to expand…

catch me up.  aren’t there complaints over the years that the AMT has crept up and snagged a bunch of so called middle class americans?

we have been over the top of amt for as long as i can remember.  which these days, isn’t that long.  

Click to expand...

AMT is bad and should be removed.

[StarTrekDoc]

AMT is actually the flat tax that people have been yammering about over years, and now hitting upper middle class folk  -- and they don't like it.

Well, it's a flat tax system --- too many deductions pushes one into AMT.   We hit it long ago with being in Cali and all our deductions.

I'm actually for a simpler, easy tax code --- it levels the playing field to a reasonable amount of tax avoiding strategies --- and then what will this and Bogglehead forums talk about with that mostly gone !?!

 

[jfoxcpacfp]

StarTrekDoc wrote:

I’m actually for a simpler, easy tax code — it levels the playing field to a reasonable amount of tax avoiding strategies — and then what will this and Bogglehead forums talk about with that mostly gone !?!

Click to expand...

I fully support tax code simplification, flat tax, etc. but have zero hope that it will ever come about.

[VagabondMD]

I have read nothing in the proposals and analyses thereof to make me believe that I (and most docs) will benefit from lower taxes from the changes that will be advanced. At best, I will break even. With the minimal amount of detail provided, it is impossible to tell for certain. I guess if the 15% tax bracket goes to $500k, and the 25% bracket to $1M, then, yeah, sure we will all likely benefit, but that ain't gonna happen.