New Tax Plan

I am a tax preparer and I just read the new tax reform. It is awesome! More money in the pockets of everyone. Higher standard deduction, more tax brackets so the sliding scale moves slower. It's going to a a good thing. Sadly it doesn't start until the 2018 taxable year. And of course it has passed the house yet.

I'm waiting to see what it looks like when it comes out the joint conference. I don't trust either side anymore. I'd rather see a flat tax with no deductions, loopholes, etc. For example lets just say 10%, if you make $1000 you pay $100, if you make $1,000,000 you pay $100,000. It would probably put a lot of people out of work like IRS employees, lobbyists, tax lawyers, the list goes on. Run our federal gov't like a profitable business and I'll bet the nat'l debt could be paid down with that kind of money collected.

JMHO,
Mike

Flat tax would work, but how would you propose the self employed figure their income? Now we have rules on what you can write off against your income to get a net income figure. Charging a flat tax on gross income wouldn't be fair to those who manufacture, have retail businesses etc...

My proposal is even more radical. Get rid of income tax altogether. Replace it with a Federal Sales Tax or Value Added Tax (VAT). All the states already have the mechanism in place to gather sales tax so all they have to do is send the Feds share to Washington. Everybody pays ... depending on how much they spend. You want the rich to pay higher taxes, they buy more expensive stuff and thus pay more tax. Easy!!!! But it does have to replace income tax and not be in addition to it.

To me it's beautifully simple and therefore has no chance of being adopted. Pity, because there would be no need for the IRS at all.

I be liking the doubling of the standard deduction.

I would love to see the irs shut down or at least shrunk a bunch, Time they were on the receiving end for a change.

The part that concerns me a bit is pass-through income for small companies, mainly S-corps and LLC's.

They don't pay federal corporate tax rates but instead pay by the individual rate. This being the case, it sounds like for many, their tax rate will go up to the new 25% rate but for the smaller companies, they most likely pay less than that right now.

bczoom said:

The part that concerns me a bit is pass-through income for small companies, mainly S-corps and LLC's.

They don't pay federal corporate tax rates but instead pay by the individual rate. This being the case, it sounds like for many, their tax rate will go up to the new 25% rate but for the smaller companies, they most likely pay less than that right now.

Click to expand...

Yes, but under this tax plan, can't a sole proprietorship use Schedule C with Form 1040 or C-EZ to amortize all their purchases first year instead of having to spread it out over a period of years? This will be big for us in 2018 and very well may more then make up for the higher tax rate.

Too late to figure that one out but I'm thinking particularly of those in professional services that don't have a lot of overhead and it's all basically income. Thinking particularly of consultants but I understand there's new rules for doctors, lawyers...

Is there some scuttlebutt or fact on how divesting shares works in the new proposed tax plan?
I've heard some weird stuff, which I have not been able to verify or not.
Like, if have holdings, the oldest have to go first?
If so, I'd be really pissed.

I just have to ask how many laws passed in our entire history has made everyone happy??
Mike