The Tax Thread

TIDE-HSV

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That will only work if they start collecting employment tax on capital gains. When you increase income tax on business owners they have the ability to reduce their wage and increase their capital gains and give themselves dividends on the profit without it ever showing up as income.
That's flawed. In the first place, it would have to be a non-pass-through entity, IOW, a Sub C corporation (or a pass-through opting to be taxed as a corporation). The dividends, even when accumulated (there's also an accumulation penalty tax, past a certain point), when distributed to you would likely be taxed at a higher rate than that proposed for the increased SE tax, and that's taxable, even if you had no income. IF you opted for a Sub C corporation, and you didn't run into the accumulation tax, (and the penalty tax against unreasonably low compensation), then, in the far-off future, you might be able to get capital gains treatment indirectly for the increase in stock value, if you can get a buyer who is willing to buy your stock, rather than assets. IF you couldn't - and you probably can't - then, when you liquidate to sell the business, those accumulated earnings will be taxed at ordinary income rates, not at capital gains. There's many a slip between cup and lip...
 

CharminTide

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I'm honestly so very happy to see this coming from so many Dem/pseudo-Dem candidates. For the record, I'm perfectly fine with accumulating wealth and passing it on to your children. But at some point, you create an oligarchic environment that entrenches a permanent ruling class derived from a small number of families, and it's a de facto recreation of the monarchy that we sought to divorce centuries ago. If you prosper enough to pass on even a few million to your kids, that's great. But the class of permanent wealth and political power passing, say, a billion to their children and ensuring that the next 10 generations of their family won't have to work a day in their lives? Solid nope. If you deign to think we live in any sort of meritocratic society, or at least aspire to one, that sort of generational wealth transfer is antithetical. The cracks are already showing. And if you want to prevent France-style regicide, this is the only way.

Bernie Sanders to propose dramatic expansion in estate tax on richest Americans, including 77 percent rate on billionaires

Sen. Bernie Sanders (I-Vt.) will unveil a plan Thursday to dramatically expand the federal estate tax on the wealthy, including a new 77 percent rate on billionaires' estates, as leading Democratic politicians push new taxes on the richest Americans to combat inequality.

Sanders’s bill, the “For the 99.8% Act,” would tax the estates of the 0.2 percent of Americans who inherit more than $3.5 million, while the rest of the country “would not see their taxes go up by one penny under this plan,” according to aides to the Vermont senator, who is considering a 2020 presidential bid.

Three top Republican senators this week released a plan to outright abolish the estate tax, which the GOP already significantly weakened with their 2017 tax law to only apply to those passing on more than $11 million (or $22 million for couples). Sanders’s plan would restore the 77 percent top estate tax rate that was in place in the U.S. from 1941 to 1976, tax estates worth more than $3.5 million, and create several new estate tax brackets, including a 55 percent rate on estates worth more than $50 million.
 

TIDE-HSV

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I'm honestly so very happy to see this coming from so many Dem/pseudo-Dem candidates. For the record, I'm perfectly fine with accumulating wealth and passing it on to your children. But at some point, you create an oligarchic environment that entrenches a permanent ruling class derived from a small number of families, and it's a de facto recreation of the monarchy that we sought to divorce centuries ago. If you prosper enough to pass on even a few million to your kids, that's great. But the class of permanent wealth and political power passing, say, a billion to their children and ensuring that the next 10 generations of their family won't have to work a day in their lives? Solid nope. If you deign to think we live in any sort of meritocratic society, or at least aspire to one, that sort of generational wealth transfer is antithetical. The cracks are already showing. And if you want to prevent France-style regicide, this is the only way.

Bernie Sanders to propose dramatic expansion in estate tax on richest Americans, including 77 percent rate on billionaires
Among the most notable proponents of the estate tax are Warren Buffet and Bill Gates' father...
 

DzynKingRTR

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I want a flat tax. Not because I think it is fair or because I think it is a good idea. I want a flat tax because I am lazy and don’t want to have to do my taxes every year. The older I get the more complicated mine seem to be getting.

If anyone wants to volunteer to pay what I owe this year, I will be willing to accept it.
 

Bamaro

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I want a flat tax. Not because I think it is fair or because I think it is a good idea. I want a flat tax because I am lazy and don’t want to have to do my taxes every year. The older I get the more complicated mine seem to be getting.

If anyone wants to volunteer to pay what I owe this year, I will be willing to accept it.
 

Bamabuzzard

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Rather than starting a new thread I'll put this here. Buddy of mine just did his taxes for 2018. Here's roughly their tax situation each year. Combine income for he and his wife is $165,000 (before deductions, credits, etc.). They have two kids, one is in college and one is in HS. They do not have any other income or losses from business ventures, stock losses etc. Their tax situation is straight forward and has been for years. Income from their jobs and that's it. They normally itemize and give quite a bit to their church. Their itemized deductions routinely exceed $24,000 each year. Much of this comes from tithes, state income tax withholding, mortgage interest.

He did his taxes over the weekend and at the end of it owed $2,500 more than last year. Here's why, personal exemptions for the kids are eliminated, but was supposed to be made up for with the increase in the child tax credit. The standard deduction for married filing joint is $24,000, doubled from $12,500 in previous years. However, he said if your itemized deductions exceed the standard deduction for married filing joint the child tax credits phase out. So, not only did he lose he kids personal exemption, he also lost the child tax credit for the one in HS.

In his mind he falls into the middle to upper middle class and this tax reform was supposed to help him. Yet to his surprise (and will be many, many, many others like him) his taxes increased by $2,500.
 

TIDE-HSV

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That's what I told him. But he'd already filed and didn't know he could do that. I'm not going to tell him to amend. Because he'd probably ask me to do it and I don't do taxes for friends. Even if they want to pay me.
I believe that election can be reversed with an amended return, at least it used to be possible. However, he's unlikely to come out better. There are going to be a lot of disappointed people this year...
 

TIDE-HSV

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That's what I told him. But he'd already filed and didn't know he could do that. I'm not going to tell him to amend. Because he'd probably ask me to do it and I don't do taxes for friends. Even if they want to pay me.
This is not the year to file early, even to get a refund...
 

Bamabuzzard

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I hope his is an anomaly, but please tell him to buy turbotax. Looks like it will be worth the cost to him.
Yeah, I'm actually starting to wonder if what he told me was actually right (child tax credit phasing out after a certain amount of itemized deducts are taken). I've yet to start my taxes so I haven't gotten into the details of the changes. I've got rental property and other "stuff" that has to come in so I normally don't even look at mine until middle of March.
 

Bodhisattva

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...He did his taxes over the weekend and at the end of it owed $2,500 more than last year....
Tell your friend to rejoice because Joe Biden now considers him $2500 more patriotic last year. (not blue)

Also, remind your friend that the government's need to waste $2500 is stronger than your friend's need to use his $2500 to pay bills or invest. (also not blue)
 

Bamaro

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Tell your friend to rejoice because Joe Biden now considers him $2500 more patriotic last year. (not blue)

Also, remind your friend that the government's need to waste $2500 is stronger than your friend's need to use his $2500 to pay bills or invest. (also not blue)
There is very little connection between government waste and taxes.
 

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