CDZ Wow! They are gonna pass it, so I'm going to take it, but wow, just wow!

[william the wie]

You are free to donate your excess wealth to the federal government.

I presume you are joking.

I like most folks construe federal income tax as the price the government charges for the services it renders to the nation. I, like everyone I know, have never paid a supplier more than the price they demanded (for governments, the tax code is the way the demanded price is determined) for whatever they provided.

If that were true then we wouldn't be 20 trillion in debt....where greedy, corrupt politicians spent money beyond what we gave them to pay for our government needs.

Better the people who earn the money keep the money than to give it to politicians for their cronies and power amassing practices....

Virtually all of the economic impact of the bill will be the result of migration. The big losers will be IL& CA followed by MA, NY &NJ. The big winners will be AK, FL, NH & TX. Since construction is an Investment done by a service industry GDP growth will be 8-12%. That has been true for East Asia, Ireland and the US from the implementation of Reagan's corporate income tax till its repeal under Bush after 18 months. Far East and Latin American investors will drive stock and real estate prices to unsustainable levels. Boom and bust on a roughly 8 year until repeal and/or the US becomes the only game in town is the result that should be expected.

 

[usmbguest5318]

Just heard that the tax rate on pass-through income will be 20%!

I don't know if most folks know what that means. I know what it means for me and my partners. It means that we and other tens of thousands of professionals like us and working in "high dollar" firms -- doctors, consultants, accountants, attorneys, engineers, architects, etc. -- even though we earn very handsome incomes, we'll pay federal income tax on our incomes at rates lower than will people who earn less or more and are paid as employees.

I wouldn't have much to say about the drop in the tax rate, but for the fact that the drop amounts, for many such folks, to a 19.6% tax cut! If you think your doctor(s) are well-off now, make no mistake, they are about to see a huge bump in their after-tax income. To see what I mean, check out what the taxable income range is for folks in the current 15% and 25% brackets. Now consider that people such as those I've described above and who quite often earn or earn more than $420K/year will be paying in comparison to folks who fall into the 15% to 25% bracket range.

the tax rate on pass-through income will be 20%!

I haven't seen that. You have a link?

Take your pick: GOP bill taxation of pass-through income.

I take it you watch only the news programs that have not been talking about this feature of the GOP tax plan? I infer that because that provision isn't new. During the 2016 campaign, Trump proposed setting the pass-through income rate at 25%. I don't know the details of how it got dropped to the even lower 20%.

I've even many times before on USMB called attention to the proposed taxation of pass-through income, as well as to many aspects pertaining to pass-through income. A random handful of those posts are linked below:

• Trump lies shamelessly about his tax-cut plan.
  
• Trump lies shamelessly about his tax-cut plan.
  
• Well, have the left wing liars admitted yet that Trump paid a higher rate in taxes yet?
  
• CDZ - Wow! They are gonna pass it, so I'm going to take it, but wow, just wow!
  
• CDZ - "The People" and the NFL

I take it you watch only the news programs that have not been talking about this feature of the GOP tax plan?

I read that some portion was excluded from taxation, not that the rate was dropped to 20%.


FOR BUSINESSES AND CORPORATIONS

13. Lowers tax burden on pass-through businesses: The tax burden on owners, partners and shareholders of S-corporations, LLCs and partnerships -- who pay their share of the business' taxes through their individual tax returns -- would be lowered by a 20% deduction, somewhat less than the 23% called for in the Senate-passed bill.

The 20% deduction would be prohibited for anyone in a service business -- unless their taxable income is less than $315,000 if married ($157,500 if single).

14. Includes rule to prevent abuse of pass-through tax break: If the owner or partner in a pass-through also draws a salary from the business, that money would be subject to ordinary income tax rates.

But to prevent people from recharacterizing their wage income as business profits to get the benefit of the pass-through deduction, the bill would place limits on how much income would qualify for the deduction.

GOP tax plan: Key details of the final bill, explained

I don't know the details of how it got dropped to the even lower 20%.

Because it didn't.

"Lowered by a 20%" deduction vs. "paying at 20%." ....Well, if one's already paying at 39.6%, and 39.6 - 20 = 19.6.....

I'll accord you that for many high earning professionals (gross income in the $750K to $2M range), it'll take high quality tax planning to get their taxable incomes down to $315K (or $157K), but make no mistake, it's far from impossible to do.

 

[Toddsterpatriot]

Just heard that the tax rate on pass-through income will be 20%!

I don't know if most folks know what that means. I know what it means for me and my partners. It means that we and other tens of thousands of professionals like us and working in "high dollar" firms -- doctors, consultants, accountants, attorneys, engineers, architects, etc. -- even though we earn very handsome incomes, we'll pay federal income tax on our incomes at rates lower than will people who earn less or more and are paid as employees.

I wouldn't have much to say about the drop in the tax rate, but for the fact that the drop amounts, for many such folks, to a 19.6% tax cut! If you think your doctor(s) are well-off now, make no mistake, they are about to see a huge bump in their after-tax income. To see what I mean, check out what the taxable income range is for folks in the current 15% and 25% brackets. Now consider that people such as those I've described above and who quite often earn or earn more than $420K/year will be paying in comparison to folks who fall into the 15% to 25% bracket range.

the tax rate on pass-through income will be 20%!

I haven't seen that. You have a link?

Take your pick: GOP bill taxation of pass-through income.

I take it you watch only the news programs that have not been talking about this feature of the GOP tax plan? I infer that because that provision isn't new. During the 2016 campaign, Trump proposed setting the pass-through income rate at 25%. I don't know the details of how it got dropped to the even lower 20%.

I've even many times before on USMB called attention to the proposed taxation of pass-through income, as well as to many aspects pertaining to pass-through income. A random handful of those posts are linked below:

• Trump lies shamelessly about his tax-cut plan.
  
• Trump lies shamelessly about his tax-cut plan.
  
• Well, have the left wing liars admitted yet that Trump paid a higher rate in taxes yet?
  
• CDZ - Wow! They are gonna pass it, so I'm going to take it, but wow, just wow!
  
• CDZ - "The People" and the NFL

I take it you watch only the news programs that have not been talking about this feature of the GOP tax plan?

I read that some portion was excluded from taxation, not that the rate was dropped to 20%.


FOR BUSINESSES AND CORPORATIONS

13. Lowers tax burden on pass-through businesses: The tax burden on owners, partners and shareholders of S-corporations, LLCs and partnerships -- who pay their share of the business' taxes through their individual tax returns -- would be lowered by a 20% deduction, somewhat less than the 23% called for in the Senate-passed bill.

The 20% deduction would be prohibited for anyone in a service business -- unless their taxable income is less than $315,000 if married ($157,500 if single).

14. Includes rule to prevent abuse of pass-through tax break: If the owner or partner in a pass-through also draws a salary from the business, that money would be subject to ordinary income tax rates.

But to prevent people from recharacterizing their wage income as business profits to get the benefit of the pass-through deduction, the bill would place limits on how much income would qualify for the deduction.

GOP tax plan: Key details of the final bill, explained

I don't know the details of how it got dropped to the even lower 20%.

Because it didn't.

"Lowered by a 20%" deduction vs. "paying at 20%." ....Well, if one's already paying at 39.6%, and 39.6 - 20 = 19.6.....

I'll accord you that for many high earning professionals (gross income in the $750K to $2M range), it'll take high quality tax planning to get their taxable incomes down to $315K (or $157K), but make no mistake, it's far from impossible to do.

"Lowered by a 20%" deduction vs. "paying at 20%." ....Well, if one's already paying at 39.6%, and 39.6 - 20 = 19.6.....

LOL!

Wrong.

Instead of paying 39.6% on 100% of your taxable income, you'd pay it on 80% of your taxable income.

80% x 39.6% = 31.68%

 

[task0778]

Just heard that the tax rate on pass-through income will be 20%!

I don't know if most folks know what that means. I know what it means for me and my partners. It means that we and other tens of thousands of professionals like us and working in "high dollar" firms -- doctors, consultants, accountants, attorneys, engineers, architects, etc. -- even though we earn very handsome incomes, we'll pay federal income tax on our incomes at rates lower than will people who earn less or more and are paid as employees.

I wouldn't have much to say about the drop in the tax rate, but for the fact that the drop amounts, for many such folks, to a 19.6% tax cut! If you think your doctor(s) are well-off now, make no mistake, they are about to see a huge bump in their after-tax income. To see what I mean, check out what the taxable income range is for folks in the current 15% and 25% brackets. Now consider that people such as those I've described above and who quite often earn or earn more than $420K/year will be paying in comparison to folks who fall into the 15% to 25% bracket range.

the tax rate on pass-through income will be 20%!

I haven't seen that. You have a link?

Take your pick: GOP bill taxation of pass-through income.

I take it you watch only the news programs that have not been talking about this feature of the GOP tax plan? I infer that because that provision isn't new. During the 2016 campaign, Trump proposed setting the pass-through income rate at 25%. I don't know the details of how it got dropped to the even lower 20%.

I've even many times before on USMB called attention to the proposed taxation of pass-through income, as well as to many aspects pertaining to pass-through income. A random handful of those posts are linked below:

• Trump lies shamelessly about his tax-cut plan.
  
• Trump lies shamelessly about his tax-cut plan.
  
• Well, have the left wing liars admitted yet that Trump paid a higher rate in taxes yet?
  
• CDZ - Wow! They are gonna pass it, so I'm going to take it, but wow, just wow!
  
• CDZ - "The People" and the NFL

I take it you watch only the news programs that have not been talking about this feature of the GOP tax plan?

I read that some portion was excluded from taxation, not that the rate was dropped to 20%.


FOR BUSINESSES AND CORPORATIONS

13. Lowers tax burden on pass-through businesses: The tax burden on owners, partners and shareholders of S-corporations, LLCs and partnerships -- who pay their share of the business' taxes through their individual tax returns -- would be lowered by a 20% deduction, somewhat less than the 23% called for in the Senate-passed bill.

The 20% deduction would be prohibited for anyone in a service business -- unless their taxable income is less than $315,000 if married ($157,500 if single).

14. Includes rule to prevent abuse of pass-through tax break: If the owner or partner in a pass-through also draws a salary from the business, that money would be subject to ordinary income tax rates.

But to prevent people from recharacterizing their wage income as business profits to get the benefit of the pass-through deduction, the bill would place limits on how much income would qualify for the deduction.

GOP tax plan: Key details of the final bill, explained

I don't know the details of how it got dropped to the even lower 20%.

Because it didn't.

"Lowered by a 20%" deduction vs. "paying at 20%." ....Well, if one's already paying at 39.6%, and 39.6 - 20 = 19.6.....

I'll accord you that for many high earning professionals (gross income in the $750K to $2M range), it'll take high quality tax planning to get their taxable incomes down to $315K (or $157K), but make no mistake, it's far from impossible to do.

Did you miss the part that says the high-dollar professional services businesses don't get to take that 20% deduction? And I think your math is a bit fuzzy, let's say you're married filing jointly and your taxable income is $300,000 which is under the limit. under the current tax code, you'd pay almost 40%, no? That's what, about $120k in federal taxes.

Under the new tax bill, you get a 20% reduction in your taxable income, so that's means your taxable income is now $240,000, right? Upon which you'll pay something like 37% or so. Which comes out to a bit less than $90 grand in taxes. So, you're paying about $90k/$300k, that's a far cry from 39.6 - 20 = 19.6..... My math says you'll be paying about 30%.

And BTW, it's going to take some really fancy maneuvering to get somebody's taxable income down from the range you mentioned to under $315k (married) or $157,700 (single). Might be doable, but then it won't be any different than it is now. So tell me again, how are you going to get a high-dollar professional person's tax rate down from near 40% to less than 20%. That's a load of crap.

 

[BasicHumanUnit]

I presume you are joking.

I like most folks construe federal income tax as the price the government charges for the services it renders to the nation. I, like everyone I know, have never paid a supplier more than the price they demanded (for governments, the tax code is the way the demanded price is determined) for whatever they provided.

You almost make government sound like a bonafide, legitimate business.......it is NOT...by ANY stretch.
It is a burden on it's citizens taking FAR more than giving back. The PEOPLE of the nation are supposed to be SERVED by it's SERVANT, Federal Government. But due to corruption and greed, Federal government now is the PRIMARY vehicle for people to get wealthy through favoritism and corruption.

Anyway, what you're all saying is that this tax thing is basically a shell game.
Wouldn't surprise me one bit. TPTB in Federal government doesn't give a shit about regular citizens.

 

[BasicHumanUnit]

Virtually all of the economic impact of the bill will be the result of migration. The big losers will be IL& CA followed by MA, NY &NJ. The big winners will be AK, FL, NH & TX. Since construction is an Investment done by a service industry GDP growth will be 8-12%. That has been true for East Asia, Ireland and the US from the implementation of Reagan's corporate income tax till its repeal under Bush after 18 months. Far East and Latin American investors will drive stock and real estate prices to unsustainable levels. Boom and bust on a roughly 8 year until repeal and/or the US becomes the only game in town is the result that should be expected.

Interesting perspective.
Will do more research about this.

 

[william the wie]

Not a shell game, a proscription masquerading as a shell game is the real case, Pelosi is right in calling this Armageddon because that is exactly what it is for the Dems.

 

[BasicHumanUnit]

Not a shell game, a proscription masquerading as a shell game is the real case, Pelosi is right in calling this Armageddon because that is exactly what it is for the Dems.

Either Trump is the real deal, or the Establishment has gotten so good at this game, it's no longer possible to tell the difference until it's too late.

My money is on the latter.

 

[usmbguest5318]

Just heard that the tax rate on pass-through income will be 20%!

I don't know if most folks know what that means. I know what it means for me and my partners. It means that we and other tens of thousands of professionals like us and working in "high dollar" firms -- doctors, consultants, accountants, attorneys, engineers, architects, etc. -- even though we earn very handsome incomes, we'll pay federal income tax on our incomes at rates lower than will people who earn less or more and are paid as employees.

I wouldn't have much to say about the drop in the tax rate, but for the fact that the drop amounts, for many such folks, to a 19.6% tax cut! If you think your doctor(s) are well-off now, make no mistake, they are about to see a huge bump in their after-tax income. To see what I mean, check out what the taxable income range is for folks in the current 15% and 25% brackets. Now consider that people such as those I've described above and who quite often earn or earn more than $420K/year will be paying in comparison to folks who fall into the 15% to 25% bracket range.

As long as you are not in a high tax state you are cool.

I'm not in any state. LOL

Not even gaseous?

LOL

 

[william the wie]

Not a shell game, a proscription masquerading as a shell game is the real case, Pelosi is right in calling this Armageddon because that is exactly what it is for the Dems.

Either Trump is the real deal, or the Establishment has gotten so good at this game, it's no longer possible to tell the difference until it's too late.

My money is on the latter.

The current goal is to win the 2018 election in order to get the Trump agenda passed prior to the 2020 reelection campaign. The simplest way to do this is is to annihilate the opponent. That is the reason for the SALT provision, it creates a huge financial incentive for the wealthy to migrate from high tax blue states to low tax red states. That in turn increases Red state tax base/person and permits further reductions in Red State SALT to increase the incentive even further. That depending on your political leanings that is a virtuous or vicious cycle.

 

[usmbguest5318]

Not a shell game, a proscription masquerading as a shell game is the real case, Pelosi is right in calling this Armageddon because that is exactly what it is for the Dems.

Either Trump is the real deal, or the Establishment has gotten so good at this game, it's no longer possible to tell the difference until it's too late.

My money is on the latter.

The current goal is to win the 2018 election in order to get the Trump agenda passed prior to the 2020 reelection campaign. The simplest way to do this is is to annihilate the opponent. That is the reason for the SALT provision, it creates a huge financial incentive for the wealthy to migrate from high tax blue states to low tax red states. That in turn increases Red state tax base/person and permits further reductions in Red State SALT to increase the incentive even further. That depending on your political leanings that is a virtuous or vicious cycle.

it creates a huge financial incentive for the wealthy to migrate from high tax blue states to low tax red states.

For the most part, multi-ten-millionaires and wealthier folks live where they live because it's where they want to live, not because the tax burden is higher or lower than some other place. (Nevermind that people in that wealth tier can and generally do declare their tax home to be whatever locality yields the minimum tax.)

 

[william the wie]

Not a shell game, a proscription masquerading as a shell game is the real case, Pelosi is right in calling this Armageddon because that is exactly what it is for the Dems.

Either Trump is the real deal, or the Establishment has gotten so good at this game, it's no longer possible to tell the difference until it's too late.

My money is on the latter.

The current goal is to win the 2018 election in order to get the Trump agenda passed prior to the 2020 reelection campaign. The simplest way to do this is is to annihilate the opponent. That is the reason for the SALT provision, it creates a huge financial incentive for the wealthy to migrate from high tax blue states to low tax red states. That in turn increases Red state tax base/person and permits further reductions in Red State SALT to increase the incentive even further. That depending on your political leanings that is a virtuous or vicious cycle.

it creates a huge financial incentive for the wealthy to migrate from high tax blue states to low tax red states.

For the most part, multi-ten-millionaires and wealthier folks live where they live because it's where they want to live, not because the tax burden is higher or lower than some other place. (Nevermind that people in that wealth tier can and generally do declare their tax home to be whatever locality yields the minimum tax.)

Only real disagreement is I am using a lower minimum wealth definition of wealthy of five million and up.

 

[deanrd]

Just heard that the tax rate on pass-through income will be 20%!

I don't know if most folks know what that means. I know what it means for me and my partners. It means that we and other tens of thousands of professionals like us and working in "high dollar" firms -- doctors, consultants, accountants, attorneys, engineers, architects, etc. -- even though we earn very handsome incomes, we'll pay federal income tax on our incomes at rates lower than will people who earn less or more and are paid as employees.

I wouldn't have much to say about the drop in the tax rate, but for the fact that the drop amounts, for many such folks, to a 19.6% tax cut! If you think your doctor(s) are well-off now, make no mistake, they are about to see a huge bump in their after-tax income. To see what I mean, check out what the taxable income range is for folks in the current 15% and 25% brackets. Now consider that people such as those I've described above and who quite often earn or earn more than $420K/year will be paying in comparison to folks who fall into the 15% to 25% bracket range.

You might want to do a little more research:

Pass Through Taxes

On top of that, the bill makes it very difficult for lawyers, engineers, doctors, consultants and other personal services providers, who make up a good share of small businesses, to qualify for the 25% rate.

As Congress readies tax overhaul, an accountant explains its impact on Connecticut taxpayers

As far as “pass-though” businesses, the final bill settled on a 20 percent deduction for these small businesses. What is a “pass through” and who might be helped in Connecticut by this new tax break?

I think this new tax break will help a lot of companies in Connecticut, because there are a lot of family-run companies in Connecticut that are either an S-corporation, or a partnership or a sole proprietorship, and all those entities would be considered pass- throughs. So, essentially, they would be getting a 20 percent deduction to help reduce what they pay on their net income.

What kinds of businesses would not be able to take advantage of this new tax break?

Looks like companies that would not get that would be service companies. So that would be your law firms, your accounting firms, your consulting firms.

So that’s going to cut out a lot of people, right? So the mom-and-pop shop will get it, but not the partnership of doctors down the street…?

That’s right, because those are service companies.

 

[usmbguest5318]

Not a shell game, a proscription masquerading as a shell game is the real case, Pelosi is right in calling this Armageddon because that is exactly what it is for the Dems.

Either Trump is the real deal, or the Establishment has gotten so good at this game, it's no longer possible to tell the difference until it's too late.

My money is on the latter.

The current goal is to win the 2018 election in order to get the Trump agenda passed prior to the 2020 reelection campaign. The simplest way to do this is is to annihilate the opponent. That is the reason for the SALT provision, it creates a huge financial incentive for the wealthy to migrate from high tax blue states to low tax red states. That in turn increases Red state tax base/person and permits further reductions in Red State SALT to increase the incentive even further. That depending on your political leanings that is a virtuous or vicious cycle.

it creates a huge financial incentive for the wealthy to migrate from high tax blue states to low tax red states.

For the most part, multi-ten-millionaires and wealthier folks live where they live because it's where they want to live, not because the tax burden is higher or lower than some other place. (Nevermind that people in that wealth tier can and generally do declare their tax home to be whatever locality yields the minimum tax.)

Only real disagreement is I am using a lower minimum wealth definition of wealthy of five million and up.

Well, okay....

Though the vicissitudes that drive economic decision making are not lost on me, I cannot say that I'm aware of how consumer behavior with regard to choosing a tax location varies the wealth gradation of one's being in the $5M+ range vs. those in the $10M+ range. Indeed, AFAIK, nobody has conducted a study that even closely enough aligns with such considerations that one could from them draw plausible inferences about how individuals in the respective wealth brackets choose their tax home.

The relationship between wealth and consumption in general (elasticity) is well understood. After all, that relationship is a central concept in ECON101. It is in that understanding that one finds the practical reason why it's unlikely that anyone has studied as much: people in the $5M+ wealth bracket have few or no substantive restrictions on where they can purchase a house and thereby declare it as their tax home. One can say thus wealthy folks determine whether the excess of resources they expend as a result of declaring "this place" as their tax home rather than declaring "that place" as such provides enough (or not enough) satisfaction to motivate them to choose one or the other, but one cannot generalize that their tax liability is the sole or overarching determinant in their "calculs" to that end.

Too, much is understood about the relationship between risk aversion and wealth. However, insofar as the risk of incurring a given, or even higher/lower than elsewhere, tax burden as a function of the siting of one's tax home is effectively 100%, such a decision doesn't much involve risk aversion (behavioral economics), but rather derives from simple elasticity (positive economics), i.e., whether one is willing to spend the money or not. About the only risk-aversion-related element pertains to the extent to which one is willing to take a few simple actions such as titling one's car there and holding a driver's license from the state in question.

 

[usmbguest5318]

Just heard that the tax rate on pass-through income will be 20%!

I don't know if most folks know what that means. I know what it means for me and my partners. It means that we and other tens of thousands of professionals like us and working in "high dollar" firms -- doctors, consultants, accountants, attorneys, engineers, architects, etc. -- even though we earn very handsome incomes, we'll pay federal income tax on our incomes at rates lower than will people who earn less or more and are paid as employees.

I wouldn't have much to say about the drop in the tax rate, but for the fact that the drop amounts, for many such folks, to a 19.6% tax cut! If you think your doctor(s) are well-off now, make no mistake, they are about to see a huge bump in their after-tax income. To see what I mean, check out what the taxable income range is for folks in the current 15% and 25% brackets. Now consider that people such as those I've described above and who quite often earn or earn more than $420K/year will be paying in comparison to folks who fall into the 15% to 25% bracket range.

You might want to do a little more research:

Pass Through Taxes

On top of that, the bill makes it very difficult for lawyers, engineers, doctors, consultants and other personal services providers, who make up a good share of small businesses, to qualify for the 25% rate.

As Congress readies tax overhaul, an accountant explains its impact on Connecticut taxpayers

As far as “pass-though” businesses, the final bill settled on a 20 percent deduction for these small businesses. What is a “pass through” and who might be helped in Connecticut by this new tax break?

I think this new tax break will help a lot of companies in Connecticut, because there are a lot of family-run companies in Connecticut that are either an S-corporation, or a partnership or a sole proprietorship, and all those entities would be considered pass- throughs. So, essentially, they would be getting a 20 percent deduction to help reduce what they pay on their net income.

What kinds of businesses would not be able to take advantage of this new tax break?

Looks like companies that would not get that would be service companies. So that would be your law firms, your accounting firms, your consulting firms.

So that’s going to cut out a lot of people, right? So the mom-and-pop shop will get it, but not the partnership of doctors down the street…?

That’s right, because those are service companies.

As with so much about the tax code, the exceptions to the rules (aka "loopholes") are every bit as important as are the rules themselves.

• See the linked content in my OP and in post #8 here: CDZ - State and local tax limitation on tax deductibility

 

[william the wie]

The difficulty is non-proprietary economic models are based on the calculi while geography, operations research and logistics require finite math. Multiple iterations and the rest of finite math give radically different and more accurate predictions but that requires a lot more computing power than econometric models. For example vertical integration of caregivers, big pharma, insurance and medical equipment with nationwide coverage to replace Obamacare is going to get really strange quick if Trump gets it passed. You can get a good first cut by simply asking your vendors about current vertical integration attempts.

 

[william the wie]

Just heard that the tax rate on pass-through income will be 20%!

I don't know if most folks know what that means. I know what it means for me and my partners. It means that we and other tens of thousands of professionals like us and working in "high dollar" firms -- doctors, consultants, accountants, attorneys, engineers, architects, etc. -- even though we earn very handsome incomes, we'll pay federal income tax on our incomes at rates lower than will people who earn less or more and are paid as employees.

I wouldn't have much to say about the drop in the tax rate, but for the fact that the drop amounts, for many such folks, to a 19.6% tax cut! If you think your doctor(s) are well-off now, make no mistake, they are about to see a huge bump in their after-tax income. To see what I mean, check out what the taxable income range is for folks in the current 15% and 25% brackets. Now consider that people such as those I've described above and who quite often earn or earn more than $420K/year will be paying in comparison to folks who fall into the 15% to 25% bracket range.

You might want to do a little more research:

Pass Through Taxes

On top of that, the bill makes it very difficult for lawyers, engineers, doctors, consultants and other personal services providers, who make up a good share of small businesses, to qualify for the 25% rate.

As Congress readies tax overhaul, an accountant explains its impact on Connecticut taxpayers

As far as “pass-though” businesses, the final bill settled on a 20 percent deduction for these small businesses. What is a “pass through” and who might be helped in Connecticut by this new tax break?

I think this new tax break will help a lot of companies in Connecticut, because there are a lot of family-run companies in Connecticut that are either an S-corporation, or a partnership or a sole proprietorship, and all those entities would be considered pass- throughs. So, essentially, they would be getting a 20 percent deduction to help reduce what they pay on their net income.

What kinds of businesses would not be able to take advantage of this new tax break?

Looks like companies that would not get that would be service companies. So that would be your law firms, your accounting firms, your consulting firms.

So that’s going to cut out a lot of people, right? So the mom-and-pop shop will get it, but not the partnership of doctors down the street…?

That’s right, because those are service companies.

As with so much about the tax code, the exceptions to the rules (aka "loopholes") are every bit as important as are the rules themselves.

• See the linked content in most OP and in post #8 here: CDZ - State and local tax limitation on tax deductibility

Total agreement.

 

[task0778]

Just heard that the tax rate on pass-through income will be 20%!

I don't know if most folks know what that means. I know what it means for me and my partners. It means that we and other tens of thousands of professionals like us and working in "high dollar" firms -- doctors, consultants, accountants, attorneys, engineers, architects, etc. -- even though we earn very handsome incomes, we'll pay federal income tax on our incomes at rates lower than will people who earn less or more and are paid as employees.

I wouldn't have much to say about the drop in the tax rate, but for the fact that the drop amounts, for many such folks, to a 19.6% tax cut! If you think your doctor(s) are well-off now, make no mistake, they are about to see a huge bump in their after-tax income. To see what I mean, check out what the taxable income range is for folks in the current 15% and 25% brackets. Now consider that people such as those I've described above and who quite often earn or earn more than $420K/year will be paying in comparison to folks who fall into the 15% to 25% bracket range.

You might want to do a little more research:

Pass Through Taxes

On top of that, the bill makes it very difficult for lawyers, engineers, doctors, consultants and other personal services providers, who make up a good share of small businesses, to qualify for the 25% rate.

As Congress readies tax overhaul, an accountant explains its impact on Connecticut taxpayers

As far as “pass-though” businesses, the final bill settled on a 20 percent deduction for these small businesses. What is a “pass through” and who might be helped in Connecticut by this new tax break?

I think this new tax break will help a lot of companies in Connecticut, because there are a lot of family-run companies in Connecticut that are either an S-corporation, or a partnership or a sole proprietorship, and all those entities would be considered pass- throughs. So, essentially, they would be getting a 20 percent deduction to help reduce what they pay on their net income.

What kinds of businesses would not be able to take advantage of this new tax break?

Looks like companies that would not get that would be service companies. So that would be your law firms, your accounting firms, your consulting firms.

So that’s going to cut out a lot of people, right? So the mom-and-pop shop will get it, but not the partnership of doctors down the street…?

That’s right, because those are service companies.

As with so much about the tax code, the exceptions to the rules (aka "loopholes") are every bit as important as are the rules themselves.

• See the linked content in my OP and in post #8 here: CDZ - State and local tax limitation on tax deductibility

Xelor: " What does that mean? It means that if one earns one's income via an S-corp, partnership or sole proprietorship, one can deduct the entirety of SALT paid. "

Me: This is unsubstantiated and I believe untrue. Nowhere on the web does it say that the final tax bill has that provision. Seriously, are we to believe that NONE of the numerous detractors of this piece of legislation saw this? You can bet what you like that they would be screaming their outrage to the rooftops if this were true? Xelor's statement is true for the current existing tax code, but the new tax law limits the SALT deduction to a maximum of $10,000. I have yet to see any loopholes or exceptions to that.

 

[usmbguest5318]

Just heard that the tax rate on pass-through income will be 20%!

I don't know if most folks know what that means. I know what it means for me and my partners. It means that we and other tens of thousands of professionals like us and working in "high dollar" firms -- doctors, consultants, accountants, attorneys, engineers, architects, etc. -- even though we earn very handsome incomes, we'll pay federal income tax on our incomes at rates lower than will people who earn less or more and are paid as employees.

I wouldn't have much to say about the drop in the tax rate, but for the fact that the drop amounts, for many such folks, to a 19.6% tax cut! If you think your doctor(s) are well-off now, make no mistake, they are about to see a huge bump in their after-tax income. To see what I mean, check out what the taxable income range is for folks in the current 15% and 25% brackets. Now consider that people such as those I've described above and who quite often earn or earn more than $420K/year will be paying in comparison to folks who fall into the 15% to 25% bracket range.

You might want to do a little more research:

Pass Through Taxes

On top of that, the bill makes it very difficult for lawyers, engineers, doctors, consultants and other personal services providers, who make up a good share of small businesses, to qualify for the 25% rate.

As Congress readies tax overhaul, an accountant explains its impact on Connecticut taxpayers

As far as “pass-though” businesses, the final bill settled on a 20 percent deduction for these small businesses. What is a “pass through” and who might be helped in Connecticut by this new tax break?

I think this new tax break will help a lot of companies in Connecticut, because there are a lot of family-run companies in Connecticut that are either an S-corporation, or a partnership or a sole proprietorship, and all those entities would be considered pass- throughs. So, essentially, they would be getting a 20 percent deduction to help reduce what they pay on their net income.

What kinds of businesses would not be able to take advantage of this new tax break?

Looks like companies that would not get that would be service companies. So that would be your law firms, your accounting firms, your consulting firms.

So that’s going to cut out a lot of people, right? So the mom-and-pop shop will get it, but not the partnership of doctors down the street…?

That’s right, because those are service companies.

As with so much about the tax code, the exceptions to the rules (aka "loopholes") are every bit as important as are the rules themselves.

• See the linked content in my OP and in post #8 here: CDZ - State and local tax limitation on tax deductibility

Xelor: " What does that mean? It means that if one earns one's income via an S-corp, partnership or sole proprietorship, one can deduct the entirety of SALT paid. "

Me: This is unsubstantiated and I believe untrue. Nowhere on the web does it say that the final tax bill has that provision. Seriously, are we to believe that NONE of the numerous detractors of this piece of legislation saw this? You can bet what you like that they would be screaming their outrage to the rooftops if this were true? Xelor's statement is true for the current existing tax code, but the new tax law limits the SALT deduction to a maximum of $10,000. I have yet to see any loopholes or exceptions to that.

Me: This is unsubstantiated and I believe untrue.

I cannot do anything about what you do or don't believe. I can only provide links to credible references and leave the remainder to you. I provided the links; the burden is thus on readers and would-be commentators to read the content at the linked webpages.

Xelor: " What does that mean? It means that if one earns one's income via an S-corp, partnership or sole proprietorship, one can deduct the entirety of SALT paid. "

About what "this" do ask? Assuming you want a summarization of what you'll discover after reading the content to which I provided links, it's this: provided they qualify for the exception(s), individuals who have an ownership stake in pass-through entities can take more than $10K in SALT deductions.

 

[task0778]

Just heard that the tax rate on pass-through income will be 20%!

I don't know if most folks know what that means. I know what it means for me and my partners. It means that we and other tens of thousands of professionals like us and working in "high dollar" firms -- doctors, consultants, accountants, attorneys, engineers, architects, etc. -- even though we earn very handsome incomes, we'll pay federal income tax on our incomes at rates lower than will people who earn less or more and are paid as employees.

I wouldn't have much to say about the drop in the tax rate, but for the fact that the drop amounts, for many such folks, to a 19.6% tax cut! If you think your doctor(s) are well-off now, make no mistake, they are about to see a huge bump in their after-tax income. To see what I mean, check out what the taxable income range is for folks in the current 15% and 25% brackets. Now consider that people such as those I've described above and who quite often earn or earn more than $420K/year will be paying in comparison to folks who fall into the 15% to 25% bracket range.

You might want to do a little more research:

Pass Through Taxes

On top of that, the bill makes it very difficult for lawyers, engineers, doctors, consultants and other personal services providers, who make up a good share of small businesses, to qualify for the 25% rate.

As Congress readies tax overhaul, an accountant explains its impact on Connecticut taxpayers

As far as “pass-though” businesses, the final bill settled on a 20 percent deduction for these small businesses. What is a “pass through” and who might be helped in Connecticut by this new tax break?

I think this new tax break will help a lot of companies in Connecticut, because there are a lot of family-run companies in Connecticut that are either an S-corporation, or a partnership or a sole proprietorship, and all those entities would be considered pass- throughs. So, essentially, they would be getting a 20 percent deduction to help reduce what they pay on their net income.

What kinds of businesses would not be able to take advantage of this new tax break?

Looks like companies that would not get that would be service companies. So that would be your law firms, your accounting firms, your consulting firms.

So that’s going to cut out a lot of people, right? So the mom-and-pop shop will get it, but not the partnership of doctors down the street…?

That’s right, because those are service companies.

As with so much about the tax code, the exceptions to the rules (aka "loopholes") are every bit as important as are the rules themselves.

• See the linked content in my OP and in post #8 here: CDZ - State and local tax limitation on tax deductibility

Xelor: " What does that mean? It means that if one earns one's income via an S-corp, partnership or sole proprietorship, one can deduct the entirety of SALT paid. "

Me: This is unsubstantiated and I believe untrue. Nowhere on the web does it say that the final tax bill has that provision. Seriously, are we to believe that NONE of the numerous detractors of this piece of legislation saw this? You can bet what you like that they would be screaming their outrage to the rooftops if this were true? Xelor's statement is true for the current existing tax code, but the new tax law limits the SALT deduction to a maximum of $10,000. I have yet to see any loopholes or exceptions to that.

Me: This is unsubstantiated and I believe untrue.

I cannot do anything about what you do or don't believe. I can only provide links to credible references and leave the remainder to you. I provided the links; the burden is thus on readers and would-be commentators to read the content at the linked webpages.

Xelor: " What does that mean? It means that if one earns one's income via an S-corp, partnership or sole proprietorship, one can deduct the entirety of SALT paid. "

About what "this" do ask? Assuming you want a summarization of what you'll discover after reading the content to which I provided links, it's this: provided they qualify for the exception(s), individuals who have an ownership stake in pass-through entities can take more than $10K in SALT deductions.

You have NEVER provided any link, credible or not that says that " if one earns one's income via an S-corp, partnership or sole proprietorship, one can deduct the entirety of SALT paid. " in any way shape or form. For the simple reason that it does not exist and never did. You are totally inventing something out of nothing with no supporting evidence whatsoever and I will waste no more time on you.

And i leave to everybody else: can anyone find anything anywhere that supports Xelor's assertion that anyone who have an ownership stake in pass-through entities can take more than $10K in SALT deductions? Clearly he can't. So show me the link please and we can end this nonsense.