A budget agreement that preceded current tax reform efforts included that tax reform can “cost” up to $1.5 trillion over ten years (H.Con. Res. 71).
Archive for Tax Reform
When you spend years acquiring compensation data on corporate tax executives you learn a lot! TaxConnections conducts a compensation study every two years given the enormity of the project. This requires an extraordinary amount of effort to compile information, match up technical responsibilities for specialized tax roles, organize the information by geographical regions, and make sense of a wide range of equity programs. We conduct compensation studies in order to help corporate management teams attract the tax talent they need. These studies are not money-makers given the great deal of time it takes to prepare them. It is difficult to obtain salary information as people must trust you in order to get the real story! We must also organize it in a fashion that makes sense when you step out of the realm of base plus bonus and into the realm of equity and perks which are as vast as the sea. What you need to know is the real story behind corporate tax compensation if you want to successfully retain and keep the very best tax talent on the market..
Charles Lincoln, Esq. (LL.M. International Tax) authors this article analyzing from an international tax law perspective, what might be the effects of the new proposed partnership rules in the US?
Partnerships are a complex combination of sole proprietorship rules, corporate rules, and financial accounting rules—the tax consequences are outlined primarily in Subchapter K of the US Internal Revenue Code.[1] Partnerships often involve individuals and individuals with corporations acting as partners engaging in business. However, when comparing the US approach to partnerships, there can be differences—especially in the concept of opaque and flow entity through taxation. Opaque is when the profits are taxed at the corporate entity level and flow through is when the profits are taxed at the individual level.
Raising our Taxes and Killing Social Security via the Republican’s Proposal for an Inflation Tax in Tax Reform
This so-called “Tax Reform” is going to raise our tax burdens while killing social security. The Republicans have proposed, and Democrats have agreed, that actual inflation should not be recognized in future years, limiting inflation adjustments of tax brackets to increase tax on persons who earn more because of inflation, and decreasing social security benefits by half over 20 years. This Tax Reform, besides reducing retirement opportunities for public employees, imposes “Chained CPI” (also known as the inflation tax) upon social security benefits to keep them from increasing and upon tax brackets to keep them from increasing as well. But tax brackets not increasing is bad for taxpayers. Tax brackets that do not move up to account for actual inflation require a higher tax rate be paid on future income as actual inflation pushes it into the next bracket.
I thought Republicans wanted lower taxes imposed on people who sweat and toil? Or do Republicans actually want lower taxes only on idle passive investors?
What if I like organic apples?
How’s that again? “Chained CPI” is sold as the savior of Social Security (see Heritage Foundation explanation). The example employed by Heritage in favor of Chained CPI: if apples go up in price, then consumers stop eating apples and eat cheaper oranges instead. What if I prefer apples? What if I am allergic to oranges? To my actual point: it is not a ‘choice of apples versus oranges world. It’s a choice between quality and cheaper (generally imported) goods. Chained CPI over time eliminates the local farmer’s organic apples in favor of the imported, genetically modified, pesticide grown cheap apples. Chained CPI requires that we reduce lean meat (sorry vegans) in favor of affordable fast food.
Chained CPI is a system built on forcing a degrading quality of life onto retirees.
Compounded over time, it’s a choice between affording medication and going without medication, giving up restaurant dates with my spouse in favor of TV dinners. The monthly annuity from social security, as little as it is relative to a 15.4% pay-in of salary (albeit capped, but so are benefits) over 40 years, could be cut significantly over 20 years (see New Republic explanation) in respect to what it can actually buy in today’s terms. In 20 years when my generations retirees wake up to this death by a thousand substitutions, the monthly social security annuity is so relatively inconsequential, it won’t be worth discussing any longer. Worse, over these 20 years, our tax bills will increase annually via the Chained CPI bracket creep that keeps brackets from adjusting upward as our wages hopefully increase. So inflationary tax takes away our ability to try to mitigate the loss of our catchup retirement and social security. We MUST work, if able, until we drop dead, assuming that we are not substituted for a cheaper wage worker.
Retired, Older Experience Hirer Inflation Than Younger Population
The Congressional Research Service has published a study that finds that elderly persons actually experience higher inflation than younger ones (see CRS Research Report A Separate Consumer Price Index for the Elderly?). Instead of going the wrong direction to a Chained CPI, the CRS suggests a CPI for the elderly spending patterns to be called CPI-E.
Follow the impact analysis of the 2018 tax updates after these pass by a team of experts who will map out how these affect your clients and what planning you need to do – TaxFacts Online.
Have a question? Contact William Byrnes
Your comments are welcome!
The tax reform bill, officially called “The Tax Cuts and Jobs Act,” H.R. 1, was released on Nov. 2, 2017. The bill contains many provisions affecting both individuals and businesses. If you use your automobile or other vehicle for work or business purposes, read on to learn about how it could have an impact on your mileage deduction.
The Senate Finance Committee Modified Mark has published the modification to source rules involving possessions; the following is a description and analysis of the proposal:
The proposal modifies the sourcing rule in section 937(b)(2) by modifying the U.S. income limitation to exclude only U.S. source (or effectively connected) income attributable to a U.S. office or fixed place of business. The proposal also modifies section 865(j)(3) by providing that capital gains income earned by a U.S. Virgin Islands resident shall be deemed to constitute U.S. Virgin Islands source income regardless of the tax rate imposed by the U.S. Virgin Islands government.
TaxConnections Members provide valuable insight into tax reform proposals. As these new tax proposals make their way through the House and the Senate, it is important to learn from highly experienced tax experts who have their eyes on the implications of any changes proposed or made.
Tax professionals are the people you can trust who understand these tax proposals. There is no better expert to look to than a retired tax expert like Do Amirian who recently sent me a copy of his letter to President Trump regarding Tax Reform Per House Bill (62% Increase for the elderly). Retired tax executives are people who have the time and experience to see through the consequences of any new tax proposals. We need to learn from years of tax expertise!
Kat Jennings, TaxConnections CEO
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Honorable President Trump,
The House will have significant adverse tax impact on the elderly, with significant medical expenses because of the elimination of the medical expense deduction.
For example, I, and my spouse Violet, will experience a federal tax increase of 62% under the House bill because of the elimination of the medical expense deduction.
Such a tax increase, an incredible 62%, is unconscionable under any standard of fairness.
Mr. President, please retain this critical deduction for the elderly, who count in the tens of millions of individuals.
Respectfully and success with your Administration,
Dro Amirian
Retired Corporate Tax Executive
Los Angeles, California
Have a question? Contact Dro Amirian
Your comments are welcome!
What an exciting month so far for tax reform! We have an amended bill passed by the House Ways and Means Committee (by vote of 24-16). The bill, H.R. 1, Tax Cuts and Jobs Act, was introduced just one week earlier. On November 9th, the Senate Finance Committee also released a 253-page summary by the Joint Committee on Taxation (most of the pages describe current law).
On November 2nd, the House of Representatives unveiled the first draft of the Trump Tax Reform Bill. Here we look at how it will affect expats.
Citizen Based Taxation and FATCA
There is no mention in the draft Tax Reform Bill of any change to citizen based taxation for individuals, or of repealing FATCA.
It is proposed that corporations are only taxed on their US profits (rather than globally), as taxing corporations globally has (conversely to expectations) reduced government revenue, as globally operating firms have simply relocated to other countries with more favorable tax regimes.
Despite ACA (American Citizens Abroad) lobbying to make a similar change away from global taxation for expat individuals, there is no mention of this in the draft bill. Read More
Kudos to Max Reed for his quick analysis on how the proposed U.S. Tax Reform bill may affect Canadian citizens/residents who also hold U.S. citizenship.
Reed’s analysis, which has been widely discussed at the Isaac Brock Society includes provisions that are very damaging to those who are the owners of Canadian Controlled Private Corporations (noting they are also under assault from Messrs. Trudeau and Morneau). The damaging provisions are both prospective and retrospective.
On Thursday, November 2nd the House of Representatives released a draft of their tax reform legislation entitled ‘The Tax Cuts and Jobs Act’ as presented by the Ways and Means Chairman Kevin Brady (R-TX). This legislation represents the largest proposed transformation of the U.S. tax code in more than thirty years. While both changes are expected in the committee markup phase and the Senate will certainly bring its own priorities to the process, this release is the first bill text we’ve seen from a tax-writing committee. The goal of President Trump and the Republicans in Congress is to have a final tax bill enacted ideally before the Thanksgiving break, but certainly before the calendar year end of 2017. The subsequent synopsis will serve to highlight just some of the more significant provisions of this bill in its current form and its impact on both individuals and businesses.
Current Articles
ALMOST HERE – Free Webinar: Avoid These Four Costly Tax Planning MistakesThis coming Thursday, on May 16th at Noon CDT, please join Tax Forum for a complimentary Webinar: Avoiding Costly Mistakes: Four Essential Tax Concepts for the Business Attorney or CPA Register Now […]
Governor Newsome Team: California Voters Simply Do Not Have Capacity To Decide Complicated Matters Like Tax HikesThis week Governor Gavin Newsom asked the California Supreme Court to block the California Taxpayer Protection Initiative from the November ballot. Newsom argued that “voters simply do not […]
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What Is Net Investment Income Tax (NIIT)?As a U.S. expat, understanding and managing both domestic and international tax obligations can often seem overwhelming. Among these obligations is the Net Investment Income Tax (NIIT), a […]
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