MY MORE THAN 2 CENTS WORTH

Here are my initial thoughts on what has been released of the White House tax reform proposal –

 

I support the end of the Estate Tax (as long as it does not do away with the step-up in basis for inherited assets).

 

I support the end of the dreaded Alternative Minimum Tax – which began as the lazy reaction of Congress to a report that 155 individuals with Adjusted Gross Income of more than $200,000 (over $1 Million in today’s dollars) paid “0” tax on their 1967 tax returns.  Instead of closing the loopholes and fixing the Tax Code the reaction of Congress was to provide a “quick fix” in the form of originally a “Minimum Tax”, which has morphed into the dreaded AMT.

 

I support reducing the number of tax brackets.

 

I support doubling the Standard Deduction.

 

I support repealing the 3.8% NIIT surtax, created by the Affordable Care Act.

 

I like closing “loopholes” – but not doing away with all itemized deductions except charitable contributions and mortgage interest.  I like keeping the deduction for acquisition debt on a taxpayer’s principal personal residence only (not home equity), but also the deduction for real estate taxes on a taxpayer’s principal personal residence only as well as the deduction for state and local income or sales taxes.  I feel that the mortgage, property tax, and state tax deductions help to “geographically equalize” taxpayers.  I can explain more about this concept in a subsequent post.  And I believe that certain “employee business expenses” should be allowed under certain circumstances.

 

To be honest I do not know enough about the concept of a “border adjustment tax” to form an educated opinion.

 

I support reducing the tax on corporations – but feel this can be done by creating a “dividend paid” deduction for corporations, which would allow corporations to claim a tax deduction for dividends paid to stockholders (combined with eliminating corporate special loopholes – and taxing net book profit less dividends paid).  Allowing a dividends paid deduction would finally do away with the double-taxation of corporate dividends.  As part of this new treatment I would have individuals pay tax on all dividends at the appropriate ordinary income rates – no more special treatment for “qualified” dividends.

 

What is wrong is capping the tax on “pass-through” self-employment income from partnerships to general partners, and the self-employment income of Schedule C filers, at 15%.  This is unfair to wage-earners.  Net earnings from self-employment should be taxed the same as wages.

 

I would support a cap equal to the top corporate rate on sub-S pass-through income, providing that the current rules and guidelines regarding reasonable salaries for sub-S shareholders are maintained. 

 

I would, however, think about considering taxing some of the excess net earnings from self-employment for partners and Schedule C filers along similar guidelines as those applied to salaries of sub-S shareholders.

 

I look forward to the actual details of the real tax reform plan that the Republicans will introduce in Congress – hopefully soon.

 

As an aside - do you find it a coincidence that the largest tax breaks in the skimpy details released would benefit idiot Trump and his family "bigly"?

 

TTFN