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Some more details are trickling in for S-Corps. With the new bill 70% of the S-Corps income must be tagged as "salary", which is subject to higher tax rates AND payroll tax. This is bad news since many one-man S-Corps typically try to minimize the payroll tax by giving themselves a lower salary, like 30-40% of the income. This bill will increase their taxes significantly.
If income was $150K, and they received $50K as salary, the payroll has been $7.5K per year. With the new bill, they will be forced to take 70% as salary, which is $105, so the payroll tax jumps to %15.7K a year. That's a $7.5K tax hike. That's a HUGE tax hike.
your point was that this would somehow force corps to reinvest in the business. Divs are taxed at lower rate, or corps could just go and buyback shares, carried interest tax remains untouched.
Thus your premise was false.
If you are the ceo of a corporation, and your choice is to pay 35% tax rate due to buy backs and dividends, or 20% by leaving the money in the corporation, you're gonna chose the 20%..
Thats why Warren Buffet stopped paying dividends on BRK.
Because its taxed at the corporate level AND a personal level.. you're taxed TWICE on it.
Some more details are trickling in for S-Corps. With the new bill 70% of the S-Corps income must be tagged as "salary", which is subject to higher tax rates AND payroll tax. This is bad news since many one-man S-Corps typically try to minimize the payroll tax by giving themselves a lower salary, like 30-40% of the income. This bill will increase their taxes significantly.
If income was $150K, and they received $50K as salary, the payroll has been $7.5K per year. With the new bill, they will be forced to take 70% as salary, which is $105, so the payroll tax jumps to %15.7K a year. That's a $7.5K tax hike. That's a HUGE tax hike.
Nice to see you concerned about Warren Buffets tax obligations..
Some more details are trickling in for S-Corps. With the new bill 70% of the S-Corps income must be tagged as "salary", which is subject to higher tax rates AND payroll tax. This is bad news since many one-man S-Corps typically try to minimize the payroll tax by giving themselves a lower salary, like 30-40% of the income. This bill will increase their taxes significantly.
If income was $150K, and they received $50K as salary, the payroll has been $7.5K per year. With the new bill, they will be forced to take 70% as salary, which is $105, so the payroll tax jumps to %15.7K a year. That's a $7.5K tax hike. That's a HUGE tax hike.
If you are the ceo of a corporation, and your choice is to pay 35% tax rate due to buy backs and dividends, or 20% by leaving the money in the corporation, you're gonna chose the 20%..
Thats why Warren Buffet stopped paying dividends on BRK.
Because its taxed at the corporate level AND a personal level.. you're taxed TWICE on it.
yes- b/c Buffer is the only example available, no other very large profitable corps pay dividends at all? None. Nor do HF managers take their money as carried interest?
Some more details are trickling in for S-Corps. With the new bill 70% of the S-Corps income must be tagged as "salary", which is subject to higher tax rates AND payroll tax. This is bad news since many one-man S-Corps typically try to minimize the payroll tax by giving themselves a lower salary, like 30-40% of the income. This bill will increase their taxes significantly.
If income was $150K, and they received $50K as salary, the payroll has been $7.5K per year. With the new bill, they will be forced to take 70% as salary, which is $105, so the payroll tax jumps to %15.7K a year. That's a $7.5K tax hike. That's a HUGE tax hike.
In a fair world, they should pay payroll rates on all of it just like their employees do.
This is very similar to the religious right allowing preachers a "housing" expense which was tax exempt, but recently ruled illegal because its income..
It reduces the ability to hide behind "benefits" and then pay yourself $1 per year by reducing deduction..
Its how many of the rich have their corporations pay for their housing, their transportation, airplanes and more, and then write it off, while the individual gets to enjoy the luxuries at minimum taxes..
Some more details are trickling in for S-Corps. With the new bill 70% of the S-Corps income must be tagged as "salary", which is subject to higher tax rates AND payroll tax. This is bad news since many one-man S-Corps typically try to minimize the payroll tax by giving themselves a lower salary, like 30-40% of the income. This bill will increase their taxes significantly.
If income was $150K, and they received $50K as salary, the payroll has been $7.5K per year. With the new bill, they will be forced to take 70% as salary, which is $105, so the payroll tax jumps to %15.7K a year. That's a $7.5K tax hike. That's a HUGE tax hike.
if that's true than GOP can stop claiming they love small business forever. Also, here comes Chamber of Commerce on the warpath.
yes- b/c Buffer is the only example available, no other very large profitable corps pay dividends at all? None. Nor do HF managers take their money as carried interest?
dividends are taxed TWICE.. what part of this are you missing? The corporation pays taxes on it as a profit, (in the proposed rate 20%) and then when its received by the recipient..
its not tax free and its not a tax shelter despite what you believe.
If you are the ceo of a corporation, and your choice is to pay 35% tax rate due to buy backs and dividends, or 20% by leaving the money in the corporation, you're gonna chose the 20%..
Thats why Warren Buffet stopped paying dividends on BRK.
Because its taxed at the corporate level AND a personal level.. you're taxed TWICE on it.
And that's why I own stocks that don't pay dividends. Cap gains is taxed lower.
And it was sage Warren Buffet where I learned that.
Sold off all of my dividend stocks and bought stocks for appreciation instead.
He was spot on.
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