Thanks for posting this, I have been looking for just such a summary. I think I will be a significant beneficiary of this provision (as I currently understand it, anyway), but I agree with other commenters that I wish we could just make things simpler and more fair.
Over the last 10 years I have had experience with small business taxes, small business retirement plans, and various estate-tax avoidance schemes. The tax code is a joke. It rewards people who have the resources to game it, and it employs an entire class of people who specialize in doing just that. Its demoralizing, but while it exists, everyone has to play the game.
Edit: Also, that same site has an even more detailed summary of the deduction here:
Agreed. As a small business (pass through LLC) owner, I'm willing to pay just about any tax that's demanded of me as long as every one of my peers is subject to the exact same taxation. If the tax is so high that it puts me out of business, I want to know that every one of my competitors is out of business, too. If the tax is so high it forces me to close my physical shop and go online, I want to know my competitors are all closing their doors too. And if I'm making record profits, hey now I can focus on competing on the merits of my product.
But if I have to shut down while my competitors stay open just because they hired a better CPA? Especially as a small business? That's a problem for me. A much bigger problem than the tax rate being 22% instead of 21%.
"I agree with other commenters that I wish we could just make things simpler and more fair."
That's what was so nice about a pass-through entity: It was both politically and revenue neutral. All of the profits flowed through to the taxpayer and the politics and revenue occurred there. Terms like "fairness" had no relevance to them.
It could not have been simpler and it was completely outside the sphere of the political discussion on taxes.
But now, by answering a question that nobody asked, the new tax code politicizes the passthrough entity and, in my opinion, will eventually lead to its discontinuance - or at the very least, layers of complication added every time we revisit this topic.
I benefit maximally from this change to passthrough entities but it is a benefit I never asked for and that will hurt me (and all of us) in the long term.
One of the worst things about the current tax code (and soon-to-be new tax law) is the cost of compliance. You can argue about high tax or low tax and who should pay more than whom, but cost and time to comply does not create any value and is an artificial way that we make our country less competitive.
This article is a clear example of that, laying out 10 different things you need to know with complicated formulas for deduction and professions that do and do not get benefits. What a mess.
I think everyone* wants this, and this is how it works in Sweden where most people get mailed a pre-filled tax form and just have to vet the information and direct the refund/pay the bill. In the US there is a not small industry of tax preparers that exists solely due to the complexity of our tax code. The complexity is there to keep H&R Block, TurboTax etc... in business by encouraging middle/low income people to keep returning to them every year.
I am amazed at how far from the stated goal of "We want you to do your taxes on an index card" this bill is going to come out as... and saddened that the majority of voters supporting the GOP won't feel fleeced by it.
*(with the exception of those preparers that very much want to keep the complexity and rich people/large businesses that can exploit loopholes effectively)
They'll only feel fleeced when the follow-up cuts to Social Security and Medicare get felt. Republicans have been very careful to say that only the benefits of current recipients of those programs won't see cuts. The rest of us who aren't yet retired will take a pretty huge hit in retirement. That's where we're being fleeced.
Perhaps the people who look at a tax return as free money from the government won't feel fleeced, but anyone who understands the concept of saving for retirement should be able to put together that we're having our tax burden lessened by $1k-$2k per year and, in exchange, needing to almost entirely fend for ourselves in retirement.
> Perhaps the people who look at a tax return as free money from the government won't feel fleeced
It's not a tax return, it's a tax cut. That means the government is taking less money from me (not giving me more money). I don't know anyone under 35 that's actually counting on SS on being there for them (not saying they're happy about, but most realized 10+ years ago that it's not gonna happen). That was a reality before this happened.
I meant that more as a description of people who don't understand finances. Anyone who knows anything realizes that a tax return is returning you your own money. But some people treat it like a windfall rather than a restoration of their own property.
Those kinds of people are the ones that don't think far enough ahead to realize that what's being taken from them, retirement, is much more valuable than what's being given to them, a small tax cut. But anyone with an actual retirement plan should be furious because those programs--that we've paid into for our entire working careers--will be supplying us with significantly less than they would otherwise.
Yes, we've known that Social Security isn't going to be enough on its own ever since Bush II replaced all the money with IOUs, but until this tax cut, there was a reasonable expectation that those programs would survive in some form and augment our 401(k) and IRA accounts. Now, we're basically on our own. And with the Republican unwillingness to deal with health care, we'll likely be left to fend for ourselves in that area...convenient since that's the most expensive part of life when it comes to medical expenses.
But hey, the 0.01% got it rough and need some tax relief, right?
Congress is full of lawyers who assume that everyone has access to lawyers. That's why everything is so complex. In reality the big guys have lawyers on retainer and can handle the laws and the little guy is at a disadvantage.
The same happens in a lot of companies. IT develops rules for IT people and the regular user is screwed.
> Congress is full of lawyers who assume that everyone has access to lawyers. That's why everything is so complex. In reality the big guys have lawyers on retainer and can handle the laws and the little guy is at a disadvantage.
Generally these changes have some sort of champion requesting them and don't just arise from the ether. I'm not sure we can explain it all away as Congress not realizing that their decisions will advantage large business interests at the expense of smaller ones, particularly when the beneficiaries are also sponsors.
I've often wished a test city/state would be allowed to just do a flat tax and completely remove all tax code and see what happens.
Obviously the convolutedness is a barrier to entry to small startups and a unfair advantage for established market entities.
Also I'd love to see an experiment on a zero tax law that basically amounted to no taxes unless the business/person earned a net profit of something deemed reasonable (say 30-50k in a modern society).
Why our societies constantly try to suffocate individuals trying to innovate and create value for his fellow members of society is beyond me.
Flat tax rates end up being pretty unfair when we're thinking about individuals because the less money you make the more it hurts you to give up 30% of your income. Maybe, arguably, flat tax would be OK for businesses, but it would be very regressive if applied to personal income tax.
Yes, I'd like to see experimenting with only a sales tax as well, so no income tax at all. You could then test a combination of the sales tax only with a flat corporate tax. These are all things hypothesized about and there has been a little bit of testing, but we really need to get on the ball with actually applying the scientific method to policy if we want to build more rapid progress in improving our societies.
Sales tax is even more regressive because the poorer you are the more likely you are to spend essentially all of your income. Sales taxes would have to go way up for that to work. We don't need to run an "experiment" to know the likely effects of this policy.
> We don't need to run an "experiment" to know this would be bad.
That's the kind of armchair philosophizing that leads to all kinds of problems, we need more scientific method and less philosophy if we want to get anywhere in a productive manner.
There's plenty of counter points to be made about the sales tax. Here's two.
1. Its the most efficient tax.
2. It has the lowest economic damage.
For point #2, the idea is that if you can increase the wealth everyone benefits, since economics is not a zero sum game. Also you can get around whatever you deem vital needs/rights i.e. food, shelter, in your society through subsidizing. Here's some other information from an economic perspective as well (https://www.taxanalysts.org/content/economic-analysis-can-st...).
Anyway, to say its even more regressive and we don't need to experiment is not progressive. We have ostensibly the same goals (more wealth for everyone, fewer people in poverty/elimination of poverty,etc) and the only way to get at social systems that optimally give us our goals is to apply a more rigorous scientific method and get out of the political philosophy camp - IMHO :)
How would we ever make any progress in medicine if we never conducted any experiments and relied instead purely on observational studies? How much slower would our progress be?
Let's not kid ourselves. No experimentation is needed to understand that such a policy would shift more of the tax burden onto the shoulders of the poor and away from the wealthy. If you want to advocate for that, knock yourself out, but it seems to me like it's manifestly unjust and it's unconscionable to conduct such an "experiment." The framing of science seems dishonest, especially when anyone can view your profile and see you are a fan of Austrian economics. I somehow doubt you'd be equally in the spirit of discovery of the "experiment" were a commune or large-scale nationalization of industries.
> I somehow doubt you'd be equally in the spirit of discovery of the "experiment" were a commune or large-scale nationalization of industries.
No I absolutely would be, so long as it is formed in a traditional experimental design. I wouldn't want anything I was proposing above or you are here to just be globally implemented, since we don't actually know how it would work out. So, I freely admit my bias. But the only way to counter bias and make progress is with data and a process for checking yourself. For me, that is the scientific process, anything else is really just us following our emotions which doesn't lead anywhere fruitful, that's my point.
This kind of extreme "scientism," if you will, ignores the fact that 1) we can anticipate the likely effects of a policy using our powers of reason and a large body of evidence from the various forms of government in action all over the entire world 2) it is unethical to conduct experiments on human subjects whose likely result is harm.
Or you could pick a "flat logarithmic" tax since the value of money is roughly logarithmic as it increases. Replace tax brackets with a simpler continuous formula that is the same for everyone.
> I've often wished a test city/state would be allowed to just do a flat tax
I don't want a flat tax (as in "all income taxed at 15%," let's say) because a flat tax has an unfair impact on people at lower income levels. But, otherwise, I agree with your entire post. Here's my ideal law, with the caveat that I have zero legal training beyond six seasons of Law and Order and four seasons of Suits:
(1) The following marginal rates are established:
(Emphasis here: these numbers are made up for demonstration purposes only.)
- $0 through $13,000: 0%
- $13,001 through $25,000: 5%
- $25,001 through $46,000: 8%
- and so on
(2) All money earned, by whatever means and from whatever source, by a person or legal entity resident in the United States shall be subject to the tax specified above.
(3) The Internal Revenue Service shall, no later than the 15th of April of each calendar year (or the next day following the business day after the 15th of April if the 15th of April falls on a Saturday, Sunday, or federal holiday), prepare and mail to each holder of an EIN, each person for whom any tax or income declaration form (such as W2, 1098, 1099, and similar) has been submitted to the IRS, a statement of what the IRS believes the taxpayer owes or is due as a refund.
(4) If the IRS has notified the taxpayer that the IRS believes the taxpayer is due a refund, the taxpayer may notify the IRS of a financial account located inside the United States into which such refund shall be deposited or may request a paper check for such refund or, under such rules as the Secretary shall provide, make a request for United States Savings Bonds. Any request must be made within five years of the date the taxpayer knew or reasonably should have known that the refund was due, otherwise the refund is the property of the Treasury absent a showing of exigence.
(5) If the IRS has notified the taxpayer that the IRS believes the taxpayer owes additional taxes, the taxpayer shall make payment to the IRS no later than the 15th of July following receipt of said notice (or the next day following the business day after the 15th of July if the 15th of July falls on a Saturday, Sunday, or federal holiday) by providing the IRS with debit instructions for a financial account located inside the United States or via a paper check or other form of transfer of dollars.
(6) In the case that the taxpayer disagrees with a notice provided by the IRS under paragraphs 5 or 6, the taxpayer shall, no later than the 15th of July following receipt of said notice (or the next day following the business day after the 15th of July if the 15th of July falls on a Saturday, Sunday, or federal holiday), file the tax forms designated by the IRS under such rules as the Secretary shall provide, to indicate what the taxpayer believes is the proper tax due or refund owed. If the taxpayer still owes additional tax, the tax payment shall be due at the time of filing. The IRS shall have 120 days to respond, otherwise the taxpayer's submission is deemed valid and binding upon the IRS.
There's a problem here: one of the goals of taxation is to encourage certain behaviors (like creating new employing in a low-employment region, or saving for retirement) and discourage others (like smoking).
You remove this important policy tool, offering no other tool to replace it.
I don't see that as a problem. It's the old "it's a feature, not a bug." Using the tax code as a cudgel for social change has, in my view, more downsides than upsides. On the one hand, exempting retirement savings is probably a good thing (making it easier for people to provide for themselves in their later years). But, on the other, exempting the cost of owning housing is probably not a good thing (encouraging sprawl and crazy lending standards).
The tax code should, in my current view which I'm willing to entertain rebuttals against, be used to raise revenue for the operation of the government. If you want to use the government to encourage other behaviors, do it in another way, like direct payments or some other incentives I can't think of right now, but keep the tax code simple lest we wind up with, frankly, the mess we have now.
Assuming you can rewrite the code to be simple is hubris.
Every non trivial system gets more complex with time, as you discover more and more edge cases, similar to software, and as we all finding out now, a rewrite would replace a known set of issues with an unknown set of issues.
You can take the mortgage interest deduction for a high-rise condo. It’s not responsible for sprawl. That would be FHA underwriting standards, but mostly local zoning, which is mostly voter preference.
What does equivalent mean? Is BitCoin an equivalent? Stocks? Real Estate? Food? An Education? Do like-kind exchanges count as income? What about non-like-kind exchanges? (i.e. what if you sell real estate and buy stocks?)
What about barter? If I trade my property or time for someone else's property or time without it ever being denominated in "money, cash or equivalent," is that taxable? From the recent controversy, does a graduate school education have a taxable value when it's offset by work the graduate student does for the University?
What about inherited wealth? Does an inheritance count as income? From one perspective, at T-1, you didn't have it and at T you did. But from the family unit perspective, nothing changed. If someone's spouse dies, since their 50% ownership of communal property just increased to 100%, is that taxable? If not, how is that really different than leaving wealth to children or extended family?
What about expatriates? If someone lives in France, earns money in France and pays French taxes, do they pay US taxes too? What if they work part time in France and part time in the US...does that earn them the lower marginal rate in both countries despite earning a much more comfortable living?
These kinds of overly-simplistic tax plans always seem to breakdown in accounting for situations that happen in the real world. And once all the necessary questions have been asked and the answers incorporated into the tax code, it's not that much simpler than what we currently have. Yes...the tax code is an overly-complex maze of crap that tends to benefit those with the best team of CPAs. But we're better off fixing that without throwing out the entire thing and starting from scratch.
So the problem with this is if I spot you a buck at the subway because you are short, you have to remember and report this. That's what the gift exemption is for in current code. Then let's not get into Rabbi trusts and all sorts of other complexities related to when something is earned.
I'm no expert, but from what I've seen, many people who are reading this should not get their hopes up.
If you're a software developer operating either as a sole proprietorship or as an S corporation, I don't think you'll get the deduction. (If you have an LLC, that doesn't mean anything to the IRS; it's treated either as a "disregarded entity", i.e. a sole proprietorship, or as an S or C corp if you've taken that election.)
See Steve's comment on the article from 12/19 at 2:48 PM, replying to someone asking whether developers and other IT professionals would get this break:
> The Sec. 199A statute references another older chunk of tax law, Sec 1202(e)(3)(A). It says this:
> “…any trade or business involving the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of 1 or more of its employees…”
> So computer/IT consulting pretty clearly fits within the “consulting” category.
> Also, if you’re a one person business, it seems pretty tricky to argue against the position that the principal asset of the business is the reputation or skill of the 1 employee doing the work.
I would appreciate correction if I'm misunderstanding this, as I certainly like tax deductions!
If your taxable income (i.e. income after above- and below-the-line deductions including the standard deduction, but before this deduction) is less than the threshold amount ($315,000 for married filing jointly, half that for single) then the specified trade or business aspect doesn't apply.
“(3) EXCEPTION FOR SPECIFIED SERVICE BUSINESSES BASED ON TAXPAYER'S INCOME.—
“(A) IN GENERAL.—If, for any taxable year, the taxable income of any taxpayer is less than the sum of the threshold amount plus $50,000 ($100,000 in the case of a joint return), then—
“(i) any specified service trade or business of the taxpayer shall not fail to be treated as a qualified trade or business due to paragraph (1)(A)
My understanding though is that these restrictions only apply to high earners (>157.5k single, >315k married), and even then the restrictions phase in gradually until you hit an even higher income. I would bet that most software developers have low enough incomes to qualify for some or all of the deduction, regardless of whether developers and IT professionals fall under the restricted categories. I could be wrong, so don't take my word for it, but I wouldn't give up hope just yet unless someone can elaborate on why this isn't the case.
Yep. Keep in mind that those numbers are taxable income not gross income. That means all deductions (including the standard deduction) except the 199A deduction itself apply before the 199A deduction. Even if you make a huge amount of gross income you can get below that threshold fairly easily by, for example, setting up a 401(k) and a defined benefit pension plan.
I've heard reporting on both sides here, at least it's not clear to me yet. Some versions of the law limited this only if you made more than a certain amount, but if you made less you could still take the deduction even if you were one of the listed professions.
But I've always read about games you could play, like buying the office building you operate in and then charging your software business an exorbitant amount of rent. It seems like that's a lot more overt than just a "gray area" though.
> Also, if you’re a one person business, it seems pretty tricky to argue against the position that the principal asset of the business is the reputation or skill of the 1 employee doing the work.
What if you're a one-person business but you're a reseller or a consignment shop like most mom-and-pop stores? That takes very little skill or reputation.
Not trying to argue, that's an actual legitimate question I have.
As a business we can assume you're bringing something to the table, that bests your competitors, is it the skill with which you've built your distribution chain? Your reputation for being able to move goods?
I don't see how that vague wording couldn't be expanded to cover everyone, it'd certain cover Trump with his self-professed "Brand Name Value" pretty much all he ever sells is his name.
According to the article you WILL get the deduction but it will begin to phase out as your taxable income exceeds $315,000 for married individuals filing jointly or $157,500 for individuals
Maybe it was to reduce ambiguity? Often legal documents define terms up front ("the participant" refers to John Doe). If they choose a common work like "is" or "through" it can become a rubik's cube trying to correctly discuss it.
Does this change the incentives on how S-Corps structure salary versus distribution? Sometimes people keep salary low (but still "reasonable") and distributions high to limit FICA. Other times people inflate their salary (and keep distributions low) to be able to contribute more to 401k profit-matches and social security.
Since it's a pass-through, it seems like taxable income might be roughly the same either way, so maybe it doesn't impact the size of the deduction all that much. Has anyone thought through this?
Why do you think that's absurd? Social Security is basically a very inefficient (and potentially insolvent) retirement plan. The more you put into it, the more you should get out. That's why people would want to maximize contributions.
I guess you'd have to do the math and maybe there's an edge case but it seems almost totally and completely inconceivable that you'd be better off increasing your rate of payroll income (which also adds the 2.9% Medicare tax as well) in hopes of one day getting larger social security checks, rather than the alternative of keeping and saving it now.
I doubt many people expand their salary to maximize social security contributions but I can say with certainty that people expand their salary to allow maximal 401k contributions, which your parent also referred to ...
It doesn’t change the incentive structure much. This will lop 20% off of each owner’s taxable income after their other deductions. So you’ll still want to pay on the low side of “reasonable” while still optimizing for 401k contributions.
As someone with a pass-they entity (s Corp) who has done my own personal and business taxes (with payroll for myself from gusto/ zen payroll)... this all seems so complicated i expect to hire an accountant for the first time next year.
How the hell is this being touted as making the tax code simpler?
I wonder if it'd be simpler to just eliminate all taxes except sales tax and have a progressive sales tax.
For example:
$0 - $20,000 - 0% (yes, poor people wouldn't pay sales tax. You could even make it so poor people get a discount, even.)
$20,001 - $40,000 - 5%
etc.
The above tiers would be defined by income plus assets times some interest rate, to represent potential gain on assets, if it were liquidated and invested. So if you had 1M in assets, and made $100,000 a year, your income would be $100,000 + 1M * federally defined interest rate.
The main difficulty with this would be that debit/credit cards would have to be issues by the government or there would have to be some collaboration between the government and banks in order to accurately determine purchases.
Well the idea is that the money will eventually be spent or transfered, and then during that event it would be taxed. I mean sure you could just let the money grow but I assume it would either be given to someone or spent eventually.
This handy guide lays out some ways that the legislators in their wisdom have sought to curb this understandable impulse. E.g. the allowable deduction is proportional to regular wages paid by the pass-thru business. So you can only take deductions on income of Person Inc if Person Inc also pays wages that are taxed at regular rates. Provisions like that will keep the tax accountants busy.
I believe you are addressing #8 on the link. This only applies to high income earners. So if you are under those thresholds you don't need to pay any additional employees.
I might be wrong but I think that tax rate is not 20%.
I think the deduction is 20%. If I understand it correctly then what it means is that if you have earned $100k then you are taxed only on $80k and 20% (20K in this case) is your deduction.
If your company earned $100k, and paid you $50k, you can deduct 20% of the 100k capped at 20% of your ordinary income ($50k), for a total deduction of $10k.
and your taxable income exceeds $315,000 for married individuals filing jointly or $157,500 for individuals. The 20% deduction starts phasing out at those levels.
I don’t think certain benefits like healthcare and 401(k) accounts can be conferred that way if you’re W-2, but if you’re 1099 I see absolutely no reason not to.
This was a handy guide. I learned something. I was under the assumption the 20% deduction was only on the income you took as a distribution, NOT all of the income.
I literally jumped for joy... then I read #5, and had a sad. I still come out better than I originally thought, but not as good as #4 led me to believe.
As I understand it, your original assumption was correct. The 20% only applies to distribution income, not to W-2 income. But the 20% deduction is limited to 50% of the W-2 income. So to maximize the deduction and minimize payroll taxes, the business owner will try to set his W-2 wages at 40% of the pass-through income, or two sevenths (~28.57%) of the business income before owner wages.
The plan would also provide many pass-through businesses with a 20 percent deduction for pass-through business income. Specified service business would be ineligible, except for households with taxable income below $157,500 for single filers and $315,000 for married filers. This provision reduces revenue by $289 billion. The pass-through provisions expire at the end of 2025.https://taxfoundation.org/final-tax-cuts-and-jobs-act-detail...
if you are happy that you can save some money this way, i think you are super lame. i am sad that over paid people like me and most of yall are now even less responsible for helping poor people (among other things, i know... )
Most people reading this (outside of VC kajillionaires) are not your enemy. But it does go to show how messed up things are. We recently saw a financial planner. Compared to most people we know personally (in a variety of non-tech industries), we are doing really well with tech salary. But compared to retirement projections, we are actually only treading water. We might be able to retire a little early, but only if things don't take a major downturn.
It underscored just how whacked things are. The next twenty years will change society. What now seems like a personal responsibility (for everyone to save for retirement) will fail so thoroughly that it will become a massive societal problem. I know so many people who pat themselves on the back for "being responsible" by putting a few hundred bucks into their Roth during tax season. It's dumbfounding how insufficient that is.
Students and people with service income think that tech people have it made. In reality we're probably more like the middle managers of the early 80's, earning one notch above the blue collar union folks. We don't really know if we'll make it to retirement before ageism or a crashing market will make our savings irrelevant.
First of all, this bill mainly helps those earning less than 315K per family < 157K for singles.
If you're making a big salary working for tech, your not as well off as you think. You may be earning x10 more than a the average "poor" person, but after income taxes, sales tax, property tax, etc, it's barely x5 to x6. And if google forces you to live on the penninsula, then your living costs are x5 to x10. I'm sure there are plenty of high tech working families in 150k to 250k range who are barely making ends meat. Those with kids will be especially hit hard: the exemption for those kids is now gone. Millenials in CA are being hit really hard with this housing crisis: the birth rate is at it's lowest it's ever been since the great depression in 1933.
>You may be earning x10 more than a the average "poor" person, but after income taxes, sales tax, property tax, etc, it's barely x5 to x6.
lol, you made me laugh.
"Look, I know it looks like I make more than you Mr Grocery Bagger, but I have a lot of property taxes on my mansion and Ferrari. So you see, I barely make 5 times more than you!"
If you earn that much, you'll most likely have to be in the bay area, probably the peninsula.
Most of the spending goes to housing and groceries. When you spend 3 million+ on a extra crappy house with a leaky rough and 1500 sq ft in palo alto, do you see what i mean?
Penninsula house prices are roughly 1-2.5 million now, and the lower range ones are pretty crappy, often in a bad neighborhood.
Granted, everything about this is in constant flux but... I thought the child exemptions were back in and stronger than before?
Also, are you getting value out of living on the penninsula? If so, is it worth the cost you're paying? If not... move. There are plenty of companies outside of SV and now quite a few of the companies there have very flexible remote working options.
As for your 10x income being reduced to 6x, do you honestly feel justified making more than 2x as someone else? Why are you as a person worth twice any other person?
It's because that's the intersection of value that an employer is willing to pay for and people are willing to work for. If everyone was paid exactly the same, then there probably wouldn't be any doctors because they'd never break even on their medical school payments, etc. Higher wages is society/capitalism's way of incentivizing more people to go into that area. there's greater need there. By paying more, more people are willing to join that occupation.
It seems weird to take the fruits of someone's labor. I mean, if you can make your bed twice as fast as I can, I don't demand that you come over and make 1/3 of my bed.
And if you grow your crops, but do it much better, yielding more fruit, it would be wrong of me to take a 1/3 of your crops.
Exemptions have been removed entirely. That's a deduction of $4,050 per child that went away. However, Child Tax Credits increased from $1,000 to $2,000 (with $1,400 being fully refundable).
For someone in a 25% tax bracket, the additional $1,000 credit is basically the same as a $4,000 exemption.
well, to me, making 5x what someone else makes is alot more, and it becomes embarrassing when it means that im able to eat and sleep comfortably and get healthcare when someone else cant. so that kind of bums me out. but hey, i guess we dont all agree on that.
im all for that, but i doubt that this provision in the tax bill is going to result in a net increase in charitable giving. and its compounded by the fact that r’s will use the huge deficit they just created as an argument for cutting services for poor people.
Over the last 10 years I have had experience with small business taxes, small business retirement plans, and various estate-tax avoidance schemes. The tax code is a joke. It rewards people who have the resources to game it, and it employs an entire class of people who specialize in doing just that. Its demoralizing, but while it exists, everyone has to play the game.
Edit: Also, that same site has an even more detailed summary of the deduction here:
https://evergreensmallbusiness.com/sec-199a-qualified-busine...