THE WANDERING TAX PRO
Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 45+-year veteran tax professional Robert D Flach.
Wednesday, April 26, 2017
MY MORE THAN 2 CENTS WORTH
Here are my
initial thoughts on what has been released of the White House tax reform
the end of the Estate Tax (as long as it does not do away with the step-up in
basis for inherited assets).
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.
reducing the number of tax brackets.
doubling the Standard Deduction.
repealing the 3.8% NIIT surtax, created by the Affordable Care Act.
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
honest I do not know enough about the concept of a “border adjustment tax” to
form an educated opinion.
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.
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.
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.
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.
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"?