Andrew Cuomo upset about losing SALT deductions

[fskimospy]

Aside from capital gains, what dime isn't taxed as ordinary income?

Pass through income, thanks to this tax bill!

Basically if you engage in some tax chicanery you can reclassify your income from wages to pass-through income and then pay a lot less in taxes than the guy next to you doing identical work.

 

[Starbuck1975]

Did you miss your morning coffee?

You asked what would happen when the Democrats jack up the taxes of the suburban affluent.

Democrats have suggested raising taxes on those making $10M. This excludes 99% of the suburban affluent. Therefore the answer to your question is basically nothing will happen since almost all the suburban affluent will not have their taxes raised by democrats.

Got it. My mistake

 

[glenn1]

Entirely missing the point as usual. You can't just focus on the SALT cap in isolation and choose to not see the rest of the legislation or apparently pretend it doesn't exist.

<checks thread title>

Andrew Cuomo upset about losing SALT deductions


Seems like someone is going off-topic for the thread and it doesn't appear to be me.

 

[K1052]

<checks thread title>

Andrew Cuomo upset about losing SALT deductions


Seems like someone is going off-topic for the thread and it doesn't appear to be me.

I've already addressed this.

I'm not defending unlimited SALT deductions. I'm taking issue with the blinkered admiration of the caps as moral and fiscally responsible in the context of a bill that is anything but.

 

[glenn1]

I've already addressed this.

Well then I can likewise say I'm not defending the rest of the tax bill. And that if anything I'd be taking issue with a mindset that looked at tax policy as a means of achieving social engineering goals instead of simply funding government operations.

 

[Vic]

I admit to being amused by this delusion that the affected affluent voters don't or won't know who it was that increased their federal taxes.

 

[fskimospy]

I admit to being amused by this delusion that the affected affluent voters don't or won't know who it was that increased their federal taxes.

From my understanding the delusion is that they know who DID increase their federal taxes but will continue to vote for those people because at some nebulous point in the future the other party MIGHT increase their taxes.

 

[Vic]

Well then I can likewise say I'm not defending the rest of the tax bill. And that if anything I'd be taking issue with a mindset that looked at tax policy as a means of achieving social engineering goals instead of simply funding government operations.

Except that this new tax policy was obviously created intentionally as a means of achieving Republican's own social engineering goals. First and foremost of these was to punish those areas that have prospered as a result of well-funded public education systems in order to push the Republican party agenda of private for-profit schools.

 

[Vic]

From my understanding the delusion is that they know who DID increase their federal taxes but will continue to vote for those people because at some nebulous point in the future the other party MIGHT increase their taxes.

Well, as you already pointed out, the election results last November clearly disprove that delusion.

 

[Fern]

Pass through income, thanks to this tax bill!

Basically if you engage in some tax chicanery you can reclassify your income from wages to pass-through income and then pay a lot less in taxes than the guy next to you doing identical work.

No.

Pass through income can be income of any classification. "Pass through" simply means the income is earned within a entity that doesn't itself pay income tax. For example a partnership. If it's an investment type partnership the investment income, be it LT or ST cap gains, interest or dividends is passed down to and reported on the partners' personal tax return. I.e., the item of income retains its character.

If, say, it was law firm partnership then the income is passed through/down to the partners' returns and taxed as ordinary income and subject to self-employment (SS tax).

In your example above the pass through person would likely pay more tax because they would be subject to self-employment which results in doubling your SS tax.

However, this issue is complicated by section 199A, the so-called "qualified business income " deduction.

Fern

 

[fskimospy]

No.

Pass through income can be income of any classification. "Pass through" simply means the income is earned within a entity that doesn't itself pay income tax. For example a partnership. If it's an investment type partnership the investment income, be it LT or ST cap gains, interest or dividends is passed down to and reported on the partners' personal tax return. I.e., the item of income retains its character.

If, say, it was law firm partnership then the income is passed through/down to the partners' returns and taxed as ordinary income and subject to self-employment (SS tax).

In your example above the pass through person would likely pay more tax because they would be subject to self-employment which results in doubling your SS tax.

However, this issue is complicated by section 199A, the so-called "qualified business income " deduction.

Fern

Can you explain why your analysis of the pass through deduction is completely at odds with every single tax lawyer and professional that I’ve seen, as well as the experience with a similar change in Kansas?

It is an enormous, distorting change to the tax code with no rational basis.

 

[fskimospy]

For example the Tax Foundation agrees with me:

https://taxfoundation.org/reforming-pass-through-deduction-199a/

The design of the pass-through deduction leaves room for improvement. The rules for claiming the deduction are relatively complex, and will arbitrarily favor certain economic activities over others. Meanwhile, it is unlikely that the current limits on the deduction will be sufficient to prevent abuse. Finally, several features of the provision’s design will diminish its economic effect.