Tax Cuts Benefit the Ultra Rich, but Not the Merely Rich
- 6 years ago
Tax Cuts Benefit the Ultra Rich, but Not the Merely Rich
Can someone explain how that is fair?”
In the world of public company chief executives — many based in states like New York, New Jersey, Massachusetts
and California, where a big chunk of the largest companies in the country reside — several told me they expected their federal taxes to increase substantially because, unlike some of their wealthy peers in other industries, they cannot turn themselves into pass-through companies or other tax-dodging entities.
It is the “pretty rich” right below that level that may get hit: the W2 employee making several hundred thousand dollars to millions of dollars a year with high state and local taxes
that will not be fully deductible may see a higher tax bill.
You’re probably asking how a tax plan that seems riddled with loopholes to benefit those who are well off —
and the Trump family — can be raising the tax bill of the wealthy when we’ve been told the opposite.
According to the Tax Policy Center, 5 percent of taxpayers would pay more in taxes in 2018; 9 percent in 2025
and 53 percent in 2027, if the plan is signed into law.
The two most popular games for the very wealthy will be running their income through pass-through companies, which pay a lower rate, or using a corporation to pay themselves a tiny salary
and huge dividends, which will be taxed at the lower capital gains rates.
That deduction is almost doubled under the new plan, to $24,000 from $13,000,
but it is still far below the costs of some of the services, which often are in the hundreds of thousands or even millions of dollars.
Can someone explain how that is fair?”
In the world of public company chief executives — many based in states like New York, New Jersey, Massachusetts
and California, where a big chunk of the largest companies in the country reside — several told me they expected their federal taxes to increase substantially because, unlike some of their wealthy peers in other industries, they cannot turn themselves into pass-through companies or other tax-dodging entities.
It is the “pretty rich” right below that level that may get hit: the W2 employee making several hundred thousand dollars to millions of dollars a year with high state and local taxes
that will not be fully deductible may see a higher tax bill.
You’re probably asking how a tax plan that seems riddled with loopholes to benefit those who are well off —
and the Trump family — can be raising the tax bill of the wealthy when we’ve been told the opposite.
According to the Tax Policy Center, 5 percent of taxpayers would pay more in taxes in 2018; 9 percent in 2025
and 53 percent in 2027, if the plan is signed into law.
The two most popular games for the very wealthy will be running their income through pass-through companies, which pay a lower rate, or using a corporation to pay themselves a tiny salary
and huge dividends, which will be taxed at the lower capital gains rates.
That deduction is almost doubled under the new plan, to $24,000 from $13,000,
but it is still far below the costs of some of the services, which often are in the hundreds of thousands or even millions of dollars.