101–110 of 323 posts
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It's a little skewed towards wealthier people, don't you think?
Think of it this way. If taxes on investment income are raised, those who aren't wealthy will have an even harder time catching up to those who are
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Working as a contractor for your wholly-owned company would never pass muster with the IRS. You might be able to avoid audit for a little while, but when this catches up to you it will be a huge mess. They would recast the transactions (they can do this) and you'd end up owing a ton of tax and penalties. Source: I'm a (former) tax lawyer.
So you're not allowed to be self-employed by a corporation that you own yourself in the US? I thought this was pretty normal practice for contractors, especially in IT. I own my own company where I do contracting work for clients and the income goes to the company. I might have misunderstood or phrased myself badly above.
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the corporation also pays taxes on the income before distributing it to you.
Not if you're Apple, et al. https://www.nytimes.com/2016/09/01/business/yesterday-outrag...
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Think of it this way. If taxes on investment income are raised, those who aren't wealthy will have an even harder time catching up to those who are
I don't think that's accurate. As of now the wealthy are pulling away quickly. This will continue if the majority of of workers' income (salary) is taxed higher than the income of investors.
"Taxing investors less is really not what the U.S. needs now,” Saez said. “Instead, we should focus on trying to rebuild middle-class wealth” by encouraging families to save for retirement and pay down mortgages." How do you encourage families to save for retirement? isn't a lower tax rate on investment income a way to do that?
But how do you save for retirement when most of your income goes to expenses? It's not the tax rate on investment that keeps the middle class from investing - it's a lack of funds.
> Americans in the top 1 percent, and especially the top 0.1 percent, have seen their wealth and income multiply in recent decades as the rest of the country’s share of the economic pie shrank. Since 2000, a recent study found, the top 1 percent have made those gains almost entirely on income from capital, especially corporate stock—not on labor income. One reason may be the financial options of the wealthy: Business…
They're currently trying to close a couple of those loopholes here in Canada, and it's surprising how much traction the complaints against the reforms are getting. The opponents are claiming that the reforms are going to devastate family doctors and family farms. The complaints are mostly bogus, but people don't understand tax law so are vulnerable to an emotional plea.
But the current Government and part of the media are attacking it on emotional grounds, like talking about how removing tax dodges that mostly only benefit the highest income earners is an attack on something used by "nurses and teachers trying to get ahead"...
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The problem is a strong multiparty system can get fringe elements in power. We also, need to rank candidates: https://www.scientificamerican.com/article/ranking-candidate...
At this point, the fringes are the only groups that have any interest in changing this aspect of the tax system
Your fringe group wants to reform the tax code. Awesome. Another wants to build a wall with Mexico. Another wants to ban immigration by non-whites. Another wants to take away voting for women. Another wants to legalize the right to carry AK-47s in public.
How do you get your "fringe" change through, but not other crazy changes through?
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If there was no capital gains tax it would almost certainly reduce investment in risky industries. For example, high tech.
The risks should be reflected in the possible return from the investment (pre-tax), and it is. This is most obvious with fixed-income investments (bonds) where the rate is directly derived from the perceived risks. The justification also breaks down when you recognise that capital gains taxes are the same for investments in any sector: If it's supposed to reward risk-taking, why tax investments in retail or insurance…
> Americans in the top 1 percent, and especially the top 0.1 percent, have seen their wealth and income multiply in recent decades as the rest of the country’s share of the economic pie shrank. Since 2000, a recent study found, the top 1 percent have made those gains almost entirely on income from capital, especially corporate stock—not on labor income. One reason may be the financial options of the wealthy: Business…
Could you link to any "for dummies"-type resources that show how you can incorporate and use that corporation to reduce your taxes? Something that would hopefully be applicable to your typical middle-class homeowner in their 30s with young kids and a 9-5 making enough to get by but is looking for any edge they can find? Edit: (in the US)
1) Start Business
2) Get Real Clients to buy your stuff
3) Deduct Expenses
4) Pay 40%* of whatever is left over to the Government
* The 40% number can go up and down depending on your income amount [and local tax commitments].
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Salaries (and bonuses) are considered expenses for the company and will be tax deductible. I believe the example was that you may as a contractor (with your own company) receive a bonus to your corporation and be able to offset taxes for another 11 months compared to having the bonus paid out personally.
Corporations have to pay quarterly estimated taxes.