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Trump, Doctors and Taxes.

Discussion in 'Anesthesiology' started by sevoflurane, Nov 30, 2016.

  1. sevoflurane

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  3. BLADEMDA

    BLADEMDA ASA Member
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    Yes, you are reading it corrrectly. That said, I don't expect this proposal to be the one which the Senate and the House agree on to become law. Trump will sign any bill that results in lower taxes even if he only gets 1/3 of what he wants.
     
  4. BLADEMDA

    BLADEMDA ASA Member
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  5. sevoflurane

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  6. FFP

    FFP Grunt, cog, body, pompous ass
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    First of all, S-corps, which are most medical practices, don't pay corporate taxes, so whoever wrote the piece is wrong. The S-corp income flows over to the shareholder's personal tax return with 0% corporate tax. So if Trump changes the corporate tax (which does not apply to S-corps), most physicians won't feel a difference, unless personal income taxes on high earners would also significantly decrease. Which I doubt would happen, for the simple reason that the rich and powerful already pay much less than us in personal income tax, so they couldn't care less. They do care about corporate taxes though, because those translate to lower profits, lower stock prices and lower dividends for their businesses.

    https://www.irs.gov/businesses/small-businesses-self-employed/s-corporations

    Now Trump could try to change the law, but I doubt it would pass, because it would decrease the income to the budget by orders of magnitude (on top of changing the corporate tax), since it would impact especially high earners. There are only so many tax cuts possible before the budget becomes really unbalanced.
     
    #5 FFP, Nov 30, 2016
    Last edited: Nov 30, 2016
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  7. Mman

    Mman Senior Member
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    I think Trump's plan as he mentioned months ago was not to change the corporate tax rate on S-corps which as you point out is already just passed through to personal income taxes, but to treat the passthrough income the individual reports on a K1 from an S-corp to be taxed as a capital gain and not income. So the author of the article is correct about the ultimate outcome they just aren't describing the details right.

    So yes, he'd treat the K1 distribution as a capital gain which would drop the marginal rate from 39.6% currently (for high enough earners) to 20% (or 15% if he lower the capital gains rate).

    My personal retirement savings account would jump for joy repeatedly if it could cut that rate in half.

    I think far more likely is that he just drops the peak rate from 39.6% back to 35% or 33% and maybe cuts capital gains to 15%, but leaves the pass through money as income. I'd still be happy with that.
     
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  8. Ignatius J

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    I like the economists that say Trump is going to add to the debt, because you know, Obamacare wasn't going to add "one penny" to the national debt, right guys?
     
    #7 Ignatius J, Nov 30, 2016
    Last edited: Nov 30, 2016
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  9. Arch Guillotti

    Arch Guillotti Senior Member
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    Mman is right, K1 income that is passed through an S-Corp will be taxed at a lower rate if Trump follows through.
     
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  10. sleepallday

    sleepallday ASA Member
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    I don't think this would make much difference to most groups since most groups zero out their accounts at the end of the year to avoid a corporate tax burden.
     
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  11. Ezekiel2517

    Ezekiel2517 Anesthesiologist
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    it most certainly would make a difference for a doc who's an independent contractor who has formed an S-corp and has distributions from it
     
  12. Arch Guillotti

    Arch Guillotti Senior Member
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    It makes an enormous difference if you get distributions/dividends.
     
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  13. caligas

    caligas ASA Member
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    I get about $100k/year through S corp distributions. If I could pay 15% instead of almost 40% on that, I would take back my Hillary vote and thank all the backwoods ******s that voted for that blowhard Cheeto.
     
  14. SaltyDog

    SaltyDog Keeping the Forces of Entropy at Bay
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    If this goes through you will see many PP groups change the way they pay themselves.
     
  15. doctalaughs

    doctalaughs Member
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    Although that could be good for some docs it seems ripe for abuse. And why should a contractor doc pay a 15% rate when a W2 doc pays 35 or 39% just because they are "a company" in theory. Any number of "contractors" whether docs, wall street people or private equity people will use this rule to reduce their taxes- it will be no different than the hedge fund manager loophole- only easier.

    In my opinion he should just lower the rates across the board and there should be no way to "reclassify" earned income to lower your rate.


    Sent from my iPhone using SDN mobile
     
  16. FFP

    FFP Grunt, cog, body, pompous ass
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    If you live in a blue state, they might "compensate" for your federal tax cuts. There is already talk about it. ;)
     
  17. caligas

    caligas ASA Member
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    Already left one state with insane state income tax, not afraid to leave another.
     
  18. sevoflurane

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    Not entirely true... ;);)
     
  19. sevoflurane

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    You bet it does... :horns:
     
  20. sevoflurane

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    Some groups are loosely put together by an LLC. In those situations you open up an S-corp and run YOUR business.
     
  21. sevoflurane

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    I actually like this idea. As it stands currently, you can opt to use the law to your advantage or not- if in the right situation.
     
  22. sevoflurane

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    Nobody is paying 15% BTW- you still need to adjust for a salary which is taxed at your tax bracket.
     
  23. dr doze

    dr doze To be able to forget means to sanity
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    Correct. Under the current rules.

    Speculation. Given statements by Trump and Congress suggest that going forward, if the law changes, If a medical practice is organized as an S-corp (which a minority currently are) the dividends they pay will be taxed at 15% instead of current marginal rates. This will be a tremendous incentive for successful private practices to reorganize as S corps instead of C-corps. Not all compensation can be classified as dividends BTW.


    Sent from my iPhone using SDN mobile app
     
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  24. jw3600

    jw3600 Account on Hold
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    Your SDN profile picture and signature are two of my favorite lines/scenes ever in pop culture. Love it.
     
  25. caligas

    caligas ASA Member
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    "These candidates make me want to vomit in terror," -Homer Simpson
     
  26. dr doze

    dr doze To be able to forget means to sanity
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    Thanks. Many don't appreciate my outlook or sense of humor.:artist:
     
  27. BLADEMDA

    BLADEMDA ASA Member
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  28. dhb

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    All of a sudden the debt level is unacceptable :eek:
    Thought that was years ago bit hey.
     
  29. ambiturner

    ambiturner ASA Member
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    So now that the proposal is getting some press: Winners and Losers in the Trump Tax Plan

    Does anybody stand to gain anything substantial from this, other than perhaps partners that distribute bonuses as dividends? I'm pretty sure I'll be getting taxed more as a result of losing the deduction for state and local taxes.
     
  30. Ezekiel2517

    Ezekiel2517 Anesthesiologist
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    Yes, any physician who is 1099. They can create an S-corp for themselves. They'd benefit greatly.
     
  31. anbuitachi

    anbuitachi ASA Member
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    Read all the posts above. confusing since im not 1099 or s corp. It seems like some ppl are saying set up S corp and income tax turns to flat 15%?? Others talk about dividends? What are dividends for a 1099
     
  32. Planktonmd

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    This alleged tax reform is nothing more than another media stunt that has no roots in reality and has zero chance of ever passing.
    It's comparable to hitting an airport in Syria with 59 Tomahawks just to say we did something.
     
  33. DrCommonSense

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    Yeah we would like to thank all the low T beta males and angry feminist schrews that avoided coming out in key states so they would not elect thunderthighs. Unfortunately more of them didn't stay home but enough did to throw the election for Trump. I guess many of them were too busy coloring their hair pink or putting weird piercings and tats all over their already mostly obese physiques.

    Bravo guys! At least I get some benefit here!
     
    #32 DrCommonSense, Apr 27, 2017
    Last edited: Apr 27, 2017
  34. DrCommonSense

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    Please don't come to a conservative state when you are running away from liberal moronic policies that destroyed your state.

    Funny how liberals run from their states after they destroyed them with high taxes, welfare, etc and then vote for the SAME politicians who would do the SAME in the new state.
     
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  35. dr doze

    dr doze To be able to forget means to sanity
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    Don't blame me. I voted for KODOS.
     
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  36. Mad Jack

    Mad Jack Critically Caring
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    As much as I like more money, I really like my money being worth something, and that requires deficit reduction, which requires money.
     
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  37. facted

    facted ASA Member
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    Not that I love getting taxed or anything, but I'd like to point out that the two most highly taxed states, NY and California are quite popular places to live hahaha.

    Meanwhile, if you want to see how far the Republican tax cuts can go, take a look at Kansas where taxes are basically non-existent. It isn't pretty.
     
  38. urge

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    I enjoyed the irony of her situation.
     
  39. urge

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    And you adjusted for being on the coasts which way?
     
  40. GravelRider

    GravelRider SDN Lifetime Donor
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    Are those conservative states going to stop accepting the federal government handouts and the redistribution of wealth from New York and California? That would go a long way in reducing the deficit and allowing true tax reform to happen.
     
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  41. urge

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    Do you have any supporting evidence for this statement?
     
  42. urge

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    I don't see why you guys are jumping for joy.

    S corp and LLC already pay 0% tax rate. And you will pay your individual tax rate (35%) on all distributions.

    The benefit will be for C corps. They will decrease form 35% tax rate to 15%. Distributions will pay maybe 20% investment income rate, only if they are considered Qualified dividends. Otherwise it is 35% again. And even then it is not so rosy:

    Even as a dividend the over all taxation is 35%
     
    #41 urge, Apr 27, 2017
    Last edited: Apr 27, 2017
  43. Ignatius J

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    My red state takes fewer dollars per capita from the federal government than Cali and New York and we aren't even robbed with a state income tax either. Come to think of it, lots of Cali folks are popping up here. What is Cali doing with that money?

    I saw Cali proposed a universal healthcare system this week that would massively increase their state budget. They have officially gone off the deep end.

    Top 10 States For Federal Spending Per Capita
     
    #42 Ignatius J, Apr 27, 2017
    Last edited: Apr 27, 2017
  44. Ezekiel2517

    Ezekiel2517 Anesthesiologist
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    This is incorrect. Talk to a CPA. Docs who incorporate will certainly be "jumping for joy". I believe WCI also posted about this on this site or somewhere else how the change would significantly reduce taxes for corps
     
  45. urge

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    Let's put this to rest. Not going to happen.
     
  46. urge

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    Trump Tax Plan Drops 15% Rate for Hedge Funds, Partnerships

     
  47. urge

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  48. Arch Guillotti

    Arch Guillotti Senior Member
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    Not really, but everything I have read supports this position. Trump's tax plan as written (all 1 page of it) essentially stands zero chance of getting passed.
     
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  49. Arch Guillotti

    Arch Guillotti Senior Member
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    Agree.
     
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  50. Ignatius J

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    It may, but there is a strategy behind it. It will be very public who opposed tax breaks for all Americans.

    Our economy grew an anemic and almost stagnant 0.7% YoY for the quarter so we are evoking the definition of insanity. We have a blueprint for economic growth through tax cuts with Reagan. It's like I am living in an alternate universe with the Left.
     
  51. Arch Guillotti

    Arch Guillotti Senior Member
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    Especially the rich Americans.
     

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