In GOP Tax Bill, How You Get Rich Matters

[question everything]

WASHINGTON—The House Republican tax bill intensified a debate about whether the GOP is setting up a big giveaway to the rich, but there is a broader policy shift embedded in the proposal: What matters isn’t just how rich you are, but how you are rich.

The plan, which was unveiled this past week and will be further dissected when lawmakers return to Washington on Monday, aims to eliminate estate taxes by 2024. It cuts to 20% the tax rate on corporate income. It also cuts to 25% the rate on some income that owners of so-called pass-through businesses such as partnerships and S corporations earn from their operations.

At the same time, the House plan leaves a top tax rate of 39.6% for those earning big salaries from their employers and doesn’t touch the top tax rate of 23.8% for capital gains and dividends.

In total, the party’s proposed vision of the tax code shows its focus in rewarding taxpayers who lawmakers think boost the economy the most.

“If you earn your income as a doctor, a lawyer, an architect, you’re not getting anything,” said Rep. Chris Collins (R., N.Y.). “But you’re not supposed to get anything—that’s how you earn your income. It wasn’t intended to lower the tax rate for a doctor, a lawyer or an architect. It was intended to lower the rate for manufacturing companies making widgets and employing other people.”

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Yet because of these changes, the tax code could become even more complex for America’s wealthiest households and open new avenues for tax avoidance.

The changes also could lead to inconsistencies that some construe as unfair. Some billionaire professional sports team owners, for example, would get sizable tax cuts while their millionaire employees on the field see little change.

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https://www.wsj.com/articles/in-gop-tax-bill-how-you-get-rich-matters-1509748889

[Wounded Bear]

1. Yep, you should get your riches the old fashioned way...

through inheritance.

[TexasBushwhacker]

2. Collins is an idiot

Doctors, lawyers and architects in private practice often have employees. What this "pass through" loophole does is it allows a business owner to pay themselves a reasonable salary of $100K (or less) for example, on which they pay income taxes according to their bracket AND self-employment tax if 14.3%, and unemployment tax. Whatever is left over they will take as a distribution to be taxed at no more than 20%, and ZERO self-employment taxes or unemployment tax.

Now supposedly their total compensation has to be at least 70% salary, but I guarantee there will be plenty of business owners who bend the rules, like my boss who takes a minimal salary and then "loans" himself tens of thousands from our cash TAX FREE. Will this withstand an audit? Of course not, but be's been doing it for 6 years.

[Crunchy Frog]

3. Wouldn't want to reward hard work or anything. n/t