Tax Reform: Implications for W-2, 1099, vs K-1 Pain MD's...

[drusso]

Industry groups will now grapple with the long-term impact of proposed tax cuts from the House.

Physician groups were left behind on the bill's provision reducing tax rates for pass-through entities. Passive owners of S corporations and limited liability corporations — the structures used by many medical groups — would be able to pay just a 25% tax rate rather than the 39.6% top rate for personal income. But medical groups and other professional service firms would not receive that reduced rate unless they were able to show the income was not labor-related.

"I'm disappointed we wouldn't see a benefit for our members," said Tina Hogeman, the MGMA's chief financial officer.

She also worried about the bill's $500,000 cap on home mortgage interest deductions, down from the current $1 million. "That's a real problem for our members," she said. "The average physician has a home that cost more than $500,000."

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[hyperalgesia]

I don't get why passive vs active LLC/s-corps should be treated differently.

I don't see why mortgage interest should be deductible at all. Why should renters subsidize the real estate and banking industries? But if it can't be eliminated, I support the cap.

 

[drusso]

I don't get why passive vs active LLC/s-corps should be treated differently.

I don't see why mortgage interest should be deductible at all. Why should renters subsidize the real estate and banking industries? But if it can't be eliminated, I support the cap.

#allscorpsmatter

 

[SSdoc33]

i wouldnt get all work up quite yet. once the details of the tax plan come out, the actual bill may look very very different. if there is even a bill to vote on, that is.....

 

[SSdoc33]

I don't get why passive vs active LLC/s-corps should be treated differently.

I don't see why mortgage interest should be deductible at all. Why should renters subsidize the real estate and banking industries? But if it can't be eliminated, I support the cap.

should we subsidize the solar power industry? what about higher education with the tax credit for school loans? charities? churches?

a million places you could have a beef with the tax plan. id be interested to see how this unfolds, but if a tax break does get through, expect a huge recession several years later -- history has been clear in this regard.

 

[Ducttape]

i think the subsidies to the solar power industry are far lower than those for fossil fuels such as coal. the President wants more coal subsidies.

 

[hyperalgesia]

should we subsidize the solar power industry? what about higher education with the tax credit for school loans? charities? churches?

a million places you could have a beef with the tax plan. id be interested to see how this unfolds, but if a tax break does get through, expect a huge recession several years later -- history has been clear in this regard.

I don't think we should use the tax code to subsidize pet project industries. Politicians are too easily bought, hence the coal and oil subsidies. You can still give govt grants out if you think an industry has potential for public good but can't find a place in the marketplace yet.

Subsidizing higher education to me is an example of what can go wrong with subsidies. Now there are a bunch of overpriced and worthless degrees that "everyone needs". Meanwhile, students are enslaved by loans with "special" rules. The education/govt complex is a whole separate and crooked economy IMO. Does it really cost 50k/year for someone to get an online degree? Gimme a break.

I would rather not have deductions for charities or churches. If someone is charitable, they don't need a tax deduction. But whatever.

As for recessions, aren't they a natural occurrence? I think lowering corporate income tax is a good idea to compete with other countries. As for the other rates, I wouldn't mind if the brackets were more spread out. Like if you make over 100 mil/year and or over 500 mil/year, you can't claim to be working to live. I feel like working people from 50k-1 mil are sniping at each other. The guy that makes 1 mil/year is still a working person, probably working his ass off.

 

[SSdoc33]

I don't think we should use the tax code to subsidize pet project industries. Politicians are too easily bought, hence the coal and oil subsidies. You can still give govt grants out if you think an industry has potential for public good but can't find a place in the marketplace yet.

Subsidizing higher education to me is an example of what can go wrong with subsidies. Now there are a bunch of overpriced and worthless degrees that "everyone needs". Meanwhile, students are enslaved by loans with "special" rules. The education/govt complex is a whole separate and crooked economy IMO. Does it really cost 50k/year for someone to get an online degree? Gimme a break.

I would rather not have deductions for charities or churches. If someone is charitable, they don't need a tax deduction. But whatever.

As for recessions, aren't they a natural occurrence? I think lowering corporate income tax is a good idea to compete with other countries. As for the other rates, I wouldn't mind if the brackets were more spread out. Like if you make over 100 mil/year and or over 500 mil/year, you can't claim to be working to live. I feel like working people from 50k-1 mil are sniping at each other. The guy that makes 1 mil/year is still a working person, probably working his ass off.

ok, so so summarize your position:

1. get rid of energy subsidies
2. get rid of all credits or interest deductions for higher education
3. get rid of the tax exempt status for religious groups
4. lower the corporate tax
5. fewer tax brackets


the first 3 are not going to happen, regardless of whether they "should" or "shouldnt" exist.

it looks to me like if trump's plan passes, "most" of use wont see much of a change. lower personal rates, but fewer deductions. the uber-rich will pay more, and the middle class will be about the same (maybe a small carrot now which becomes a stick down the road).

 

[hyperalgesia]

ok, so so summarize your position:

1. get rid of energy subsidies
2. get rid of all credits or interest deductions for higher education
3. get rid of the tax exempt status for religious groups
4. lower the corporate tax
5. fewer tax brackets


the first 3 are not going to happen, regardless of whether they "should" or "shouldnt" exist.

it looks to me like if trump's plan passes, "most" of use wont see much of a change. lower personal rates, but fewer deductions. the uber-rich will pay more, and the middle class will be about the same (maybe a small carrot now which becomes a stick down the road).

I would just say no deductions for any income whatsoever. You want to donate to Haiti because of a Hurricane, that is YOUR charity, not mine. I salute you for it. Politicians can find something else to tinker with.

Trump's plan will cost me dearly since I'm in a high tax state with an "active" LLC. But if it passes, I will blame my state for its outrageous taxes and local corruption/inefficiency. I might move. But Americans who live in more disciplined states should not have to subsidize me or my state.

 

[lonelobo]

I would just say no deductions for any income whatsoever. You want to donate to Haiti because of a Hurricane, that is YOUR charity, not mine. I salute you for it. Politicians can find something else to tinker with.

Trump's plan will cost me dearly since I'm in a high tax state with an "active" LLC. But if it passes, I will blame my state for its outrageous taxes and local corruption/inefficiency. I might move. But Americans who live in more disciplined states should not have to subsidize me or my state.

Which States Are Givers and Which Are Takers?

 

[DrCommonSense]

Which States Are Givers and Which Are Takers?

How much of that is military spending?

Also, how much of that is retirement migration as well? For instance, Florida will have many people who paid into the Federal Govt taxes as a NY resident who then go onto retire in Florida using both Medicare and SS benefits.

So under the above metric used by the Atlantic, middle class people who worked in NYC until their late ages probably paid far more in federal taxes than they took out of the system during their working age giving NY credit for tax revenue. Then when they move down to Florida while retired, they are taking far more out of the fed than putting into it in terms of SS/Medicare benefits.

 

[Ducttape]

that article is very interesting.

personally, i doubt the volume of people will be big enough to affect the Florida to NY retirement migration argument. and most snowbirds still spend 1/2 their year in NY, primarily to keep on the "better" aspects, such as NY health insurance coverage (supplemental plans are probably cheaper, and i would argue that the quality of healthcare perceptually is better for northeast than Florida)

that does not change the fact that there is still a significant disparity with all the Deep South states. far as i can tell, Tennessee, Alabama, Louisiana, New Mexico, Kentucky, South Carolina, Mississippi... i doubt you could say most of them are a high volume state for retirees.

 

[DrCommonSense]

that article is very interesting.

personally, i doubt the volume of people will be big enough to affect the Florida to NY retirement migration argument. and most snowbirds still spend 1/2 their year in NY, primarily to keep on the "better" aspects, such as NY health insurance coverage (supplemental plans are probably cheaper, and i would argue that the quality of healthcare perceptually is better for northeast than Florida)

that does not change the fact that there is still a significant disparity with all the Deep South states. far as i can tell, Tennessee, Alabama, Louisiana, New Mexico, Kentucky, South Carolina, Mississippi... i doubt you could say most of them are a high volume state for retirees.

No but I am unsure of the veracity of this argument when taking into account military spending.

i'd like to see the breakdown of these numbers further but the article is very vague in terms of explanation.

 

[hyperalgesia]

Which States Are Givers and Which Are Takers?

This data is a bit abstract for me. I still don't want to subsidize someone else's state income tax or their mortgage even if their state is a so-called "giver". Some states have natural resources and some are filled with rich people so they give back lots of taxes to the federal govt. I still don't want to pay for their crap.

 

[lonelobo]

The original article that the Atlantic story was based on with further data

2017’s Most & Least Federally Dependent States

 

[Ducttape]

so... if you don't want to pay for other people's crap from a state level, then live in a northern state. you will get taxed more. but you will be paying for stuff for your neighbors in your state rather than in some other state that is much more reliant on the feds.

if you don't want your money going to your neighbors either, then maybe Delaware? (its not Texas - their state and local taxes rank 30th!) or the Cayman islands.

2017’s Tax Rates by State

 

[mid|ine]

Industry groups will now grapple with the long-term impact of proposed tax cuts from the House.

Physician groups were left behind on the bill's provision reducing tax rates for pass-through entities. Passive owners of S corporations and limited liability corporations — the structures used by many medical groups — would be able to pay just a 25% tax rate rather than the 39.6% top rate for personal income. But medical groups and other professional service firms would not receive that reduced rate unless they were able to show the income was not labor-related.

The work around is easy. Sell you LLC to someone else and buy their LLC. Now you are both passive investors in a LLC and taxed at 25%

 

[hyperalgesia]

The work around is easy. Sell you LLC to someone else and buy their LLC. Now you are both passive investors in a LLC and taxed at 25%

Intriguing... I'm not sure I'd call it "easy" though. My practice is now owned by someone else and I'm supposed to trust his business will be as productive as mine. I don't know if I would trust my own mother with such an arrangement.

 

[mid|ine]

Intriguing... I'm not sure I'd call it "easy" though. My practice is now owned by someone else and I'm supposed to trust his business will be as productive as mine. I don't know if I would trust my own mother with such an arrangement.

Contractual language would mean you still operate the business. Profits go to the "owner", and since profits wont be equal, provisions could say that anything generated above profits of the other company are paid to you as a salary. It would all be in the structure. As well as a forced buy back provision for $1. Don't worry, I doubt any of this passes anyway.