Trump Tax Plan-Professional traders.

[davidaexp1]

Can those making the professional trader tax election be taxed at 15%? Might this be better than capital gains? I know that plan is not fully developed but curious to get a discussion going as things evolve.

Thanks in Advance

 

[Sig]

Can those making the professional trader tax election be taxed at 15%? Might this be better than capital gains? I know that plan is not fully developed but curious to get a discussion going as things evolve.

Thanks in Advance

That's not a loophole that's in the plan. But the plan's a non-starter. It will effectively reduce the tax rate to a total of 15% for everyone who has the ability to start an LLC and have their compensation paid to that LLC. Already every doctor, lawyer, and other highly paid professional will instantly go from 39.6% to 15% effective tax rate on their income. Massive loss of revenue right there. Then every employee who makes more than about $50K a year forms an LLC and becomes a contractor to their employer and their personal tax rate effectively drops to 15%, it's a no brainer. As does every small business. You decimate more than half the tax base within a couple years by more than half. Since we're still waiting for those Bush tax cuts to pay for themselves, we end up with a massively increasing deficit or we make massive cuts the military, which is responsible for 57% of discretionary spending.
There are still a few people in congress who can do basic math, and ostensibly some who care about the budget deficit. Can't see how they can possibly do anything but laugh at this "plan".

 

[R1234]

Trump's tax plan won't get passed so don't worry about it.

 

[just21]

Maybe it is a negotiating position and a deal will be agreed between the current situation and this proposal.

 

[newwurldmn]

That's not a loophole that's in the plan. But the plan's a non-starter. It will effectively reduce the tax rate to a total of 15% for everyone who has the ability to start an LLC and have their compensation paid to that LLC. Already every doctor, lawyer, and other highly paid professional will instantly go from 39.6% to 15% effective tax rate on their income. Massive loss of revenue right there. Then every employee who makes more than about $50K a year forms an LLC and becomes a contractor to their employer and their personal tax rate effectively drops to 15%, it's a no brainer. As does every small business. You decimate more than half the tax base within a couple years by more than half. Since we're still waiting for those Bush tax cuts to pay for themselves, we end up with a massively increasing deficit or we make massive cuts the military, which is responsible for 57% of discretionary spending.
There are still a few people in congress who can do basic math, and ostensibly some who care about the budget deficit. Can't see how they can possibly do anything but laugh at this "plan".

For a small business owner it's even better. 15percent and no amt. so all the business credits that one can take advantage of will effectively wipe out all the tax liability of a legit small business.

 

[Daal]

Maybe it is a negotiating position and a deal will be agreed between the current situation and this proposal.

Yes, he proposes 15% and settles at 20% or 22%. Better than asking 20% and getting 27%

 

[Sig]

Yes, he proposes 15% and settles at 20% or 22%. Better than asking 20% and getting 27%

With that logic he should have asked for -100 and settled at -25! Putting out crazy unreasonable initial offers isn't how good faith negotiations with people you'll need to negotiate with over and over with works. As Trump is learning, or would be if that was possible for him.

 

[Pippi436]

That's not a loophole that's in the plan. But the plan's a non-starter. It will effectively reduce the tax rate to a total of 15% for everyone who has the ability to start an LLC and have their compensation paid to that LLC. Already every doctor, lawyer, and other highly paid professional will instantly go from 39.6% to 15% effective tax rate on their income. Massive loss of revenue right there. Then every employee who makes more than about $50K a year forms an LLC and becomes a contractor to their employer and their personal tax rate effectively drops to 15%, it's a no brainer. As does every small business. You decimate more than half the tax base within a couple years by more than half. Since we're still waiting for those Bush tax cuts to pay for themselves, we end up with a massively increasing deficit or we make massive cuts the military, which is responsible for 57% of discretionary spending.
There are still a few people in congress who can do basic math, and ostensibly some who care about the budget deficit. Can't see how they can possibly do anything but laugh at this "plan".

Not sure how its done in the USA but around here you have to pay capital gains tax again on amounts you take out of the LLC into your personal account (or income tax if you are a payed director). So unless they let the cash accumulate in the LLC and dont want to spend it, they will pay more than 15%.

 

[Sig]

Not sure how its done in the USA but around here you have to pay capital gains tax again on amounts you take out of the LLC into your personal account (or income tax if you are a payed director). So unless they let the cash accumulate in the LLC and dont want to spend it, they will pay more than 15%.

The whole point of an LLC in the U.S. is that it's a pass-through entity. Meaning you don't have double taxation, capital gains or dividend tax, you simply count the money earned by the LLC as ordinary income on your personal income tax. As it currently stands an LLC isn't really a tax shelter, it's just a way to get the limited liability of a corporation without the double taxation of a C-corp. The proposal would turn them into a massive tax shelter, such that pretty much everyone with half a brain will set one up and direct all their income through it. Which is why it's a complete non-starter.

 

[newwurldmn]

The whole point of an LLC in the U.S. is that it's a pass-through entity. Meaning you don't have double taxation, capital gains or dividend tax, you simply count the money earned by the LLC as ordinary income on your personal income tax. As it currently stands an LLC isn't really a tax shelter, it's just a way to get the limited liability of a corporation without the double taxation of a C-corp. The proposal would turn them into a massive tax shelter, such that pretty much everyone with half a brain will set one up and direct all their income through it. Which is why it's a complete non-starter.

An LLC is actually not a tax vehicle. An llc can be taxed as a partnership, s-corp, a sole proprietorship, or even a c-corp : each which has different tax rules.