Zero incentive for me to be a productive middle to upper income worker and physician. This plan incentivizes laziness. Some estimate that as much as 50% of Americans won't be paying any tax.
As I see it, my only 2 viable options are continue as a military physician for as long as I can tolerate it, guaranteed to stay in the 25% tax bracket, while collecting an additional $30-60K of income not subject to taxes at all. Second option is continue with my real estate business full time, where I pay zero tax on my leveraged rentals.
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The method doesn't really work for me for looking at our 2016 income and making a comparison. We had an unexpected large capital gain in 2016 (equivalent to about 1/3 of our AGI), which was of course taxed at a favorable rate. But I imagine for our current income levels the new brackets will be favorable based on our recent W-2 income compared to the current brackets. Also, I think having the 25% tax bracket go all the way to $260,000 will be favorable in retirement since currently that bracket only goes to $153,000.Leave a comment:
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I’d be a lot more “OK” with GOP plan if the 35% bracket didn’t start so low. Kicks in at $260,000 for MFJ, while old system kicks in at $416,700. For someone who’s goal is to help the “middle class” whatever that means, a real head scratcher to punish this range of incomes only.
I also hope Orin Hatch brings back his “corporate tax integration” concept in which corporations could avoid double taxation by being able to deduct all or part of their dividends. This would also help a bunch of us docs that are incorporated as Professional Corporations realize the lower corporate rate of say 20% and pay out in deductible dividends, rather than all wages and quarterly bonuses to avoid double taxation. May also sell better to public and Dems. Ie compromise to lower corporate rate to only 25%, instead of 20%, but allow full deduction of shareholder dividends.
Would be better off by compromising to include more businesses overall, instead of favoring large multinationals only. Say a 25% rate, for all businesses, and of course eliminate any double taxation stuffs.
No reason can't do both.
In fact, GOP has strategy all wrong this. Big mistake to try to make a tax reform only bill revenue neutral. Better approach would've been to go bold and and file reconciliation instructions for a non-revenue neutral bill to sunset in 50 years instead of 10 years (10 years is just an arbitrary number not required by law). The incompetent & partisan CBO should not have the authority to determine if a bill needs 50 to 60 votes in the senate to be permanent. Not to mention that they have been wildly off on every major piece of legislation they have tried to model for decades (see ACA).
After a tax cut bill is passed, then move onto to a spending cut bill. A simple first start would be a 10% across the board cut on all discretionary (non-entitlement) spending, with a hiring freeze. Eliminate and consolidate entire government agencies as practical and politically possible. Even better, redistribute all the federal agencies across the country, Dept of Energy to Alaska, Dept of Agriculture to Nebraska, etc...Let the other states share in the taxpayer wealth and watch all the fat-cat DC bureacrats just quit rather than move across the country!
Easy peazy
I'm starting to sound like Rand Paul.
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I’d be a lot more “OK” with GOP plan if the 35% bracket didn’t start so low. Kicks in at $260,000 for MFJ, while old system kicks in at $416,700. For someone who’s goal is to help the “middle class” whatever that means, a real head scratcher to punish this range of incomes only.
I also hope Orin Hatch brings back his “corporate tax integration” concept in which corporations could avoid double taxation by being able to deduct all or part of their dividends. This would also help a bunch of us docs that are incorporated as Professional Corporations realize the lower corporate rate of say 20% and pay out in deductible dividends, rather than all wages and quarterly bonuses to avoid double taxation. May also sell better to public and Dems. Ie compromise to lower corporate rate to only 25%, instead of 20%, but allow full deduction of shareholder dividends.
Would be better off by compromising to include more businesses overall, instead of favoring large multinationals only. Say a 25% rate, for all businesses, and of course eliminate any double taxation stuffs.Leave a comment:
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You said game changing, not me.
$2500 is enough to cover an extra week long vacation overseas., now that flights abroad can be had for only $500-700. Thats yuuuge in my book.
Also that buys a lot of whiskey and bad decisions.
I think folks will find a way to bash Trump even when you get a free $2500 check hahaha, I love it!
A grown man, willing to sell out his country’s future for a measly $2500.
Even Joe Boyd sold his soul for more.
I guess it’s true. In a democracy, people will get the leaders they deserve.Leave a comment:
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I’d be a lot more “OK” with GOP plan if the 35% bracket didn’t start so low. Kicks in at $260,000 for MFJ, while old system kicks in at $416,700. For someone who’s goal is to help the “middle class” whatever that means, a real head scratcher to punish this range of incomes only.
I also hope Orin Hatch brings back his “corporate tax integration” concept in which corporations could avoid double taxation by being able to deduct all or part of their dividends. This would also help a bunch of us docs that are incorporated as Professional Corporations realize the lower corporate rate of say 20% and pay out in deductible dividends, rather than all wages and quarterly bonuses to avoid double taxation. May also sell better to public and Dems. Ie compromise to lower corporate rate to only 25%, instead of 20%, but allow full deduction of shareholder dividends.Leave a comment:
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So I have a sole proprietorship but this new pass thru tax would not apply to me. The few exceptions are where the tax manipulators will win out against a do-it-yourself doc.
1 person S corps currently abuse the tax code to reduce FICA taxes but it costs money to set-up unless you are a lawyer/accountant who does his own.Leave a comment:
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I would pay $870 more. I am surprised that it was not more significant being in a high tax state.Leave a comment:
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I have a bunch of rentals that I file a Schedule E on as a sole proprietorship. Would I now need to go open LLC(s) in order to take advantage of the proposed 25% on gains rate?
not as I understand it. Just the SP is fine.Leave a comment:
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Wow!!
I would have had $1,650 less taxable income and payed $2,444.25 less in taxes … that is yuuuge.
The reason the actual taxes paid savings is higher than the taxable income number is due to the stretching of the 25% bracket for single filers from $45,000 all the way to $200,000.
Although it pains me to say this, this proposed tax plan makes a stronger case for staying in the military as a physician. It is a guarantee that you will stay in the 25% marginal bracket or less, while having up to 40% of our income not taxed at all. Doesn’t even appear on these tax forms. Thoughts?
Trump is my new hero
Shhhhhh.....quiet before MPMD or Hightower accuse you of being a racist!
Seriously though, we'd get back a little more than $1000 additionally with the new tax plan, so I'm a fan too.Leave a comment:
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I have a bunch of rentals that I file a Schedule E on as a sole proprietorship. Would I now need to go open LLC(s) in order to take advantage of the proposed 25% on gains rate?Leave a comment:
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Zaphod, I agree the number of the brackets is not really important but the number of deductions reduced reduces the number of itemizers. A lot of obscure deductions that most filers would need an accountant to note were removed.
The business deduction is the big question mark but as written it doesn’t seem to apply to those businesses that are really 1 person service industries which frankly few doctors knew how to set-up but many accountants/lawyers did.
It would be great for the government to set a rational level of tax revenue, and simply apply it across the board. Honestly everything should just be pass through period, no corporate anything. Simplifies things and reflects reality.
You dont need to do anything to set those businesses up. The sole proprietor is the simplest classification there is.Leave a comment:
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Zaphod, I agree the number of the brackets is not really important but the number of deductions reduced reduces the number of itemizers. A lot of obscure deductions that most filers would need an accountant to note were removed.
The business deduction is the big question mark but as written it doesn't seem to apply to those businesses that are really 1 person service industries which frankly few doctors knew how to set-up but many accountants/lawyers did.Leave a comment:
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Mine goes up $200 even though I’m in a no income tax state. The removal of self employment health insurance premium deduction hurts and is unfair. I say remove it (I’m all for simplifying even at a cost to me) but then also remove the employer provided health insurance premium deductions.
This bill would really hike my marginal rate.
I like though that it truly simplifies the system.
It simplifies in some places but complicates it in others. And really it simplifies it in places that hardly matter like number of brackets. You'll now have two schedules (capital/dividends on old scheme) and a means testing for anyone trying to take the 25% business deduction. AMT/salt gone is simplified, but replaced with an up to 10k provision. I dont see a lot of simplification. Again, number of brackets isnt very complicated.Leave a comment:
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Mine goes up $200 even though I'm in a no income tax state. The removal of self employment health insurance premium deduction hurts and is unfair. I say remove it (I'm all for simplifying even at a cost to me) but then also remove the employer provided health insurance premium deductions.
This bill would really hike my marginal rate.
I like though that it truly simplifies the system.Leave a comment:
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