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No, that's not how taxes work in the US. Business taxes are before, and in addition to your income tax. Single member LLCs get special treatment - you only pay

No, that's not how taxes work in the US. Business taxes are before, and in addition to your income tax. Single member LLCs get special treatment - you only pay personal income taxes and self employment taxes, but not business income taxes. But let's talk about business income tax. Let's say you have a company that you own but do not work for (so I can skip payroll taxes). The company does $2,000,000 in sales at a cost of $1,700,000. The company has a profit of $300,000, which it currently pays corporate taxes of $120,000 on. After corporate taxes, you take home $180,000 in personal income. Then you pay personal income taxes of about $62,000 if you live in CA. You end up with $118,000 out of the original $300,000 profit. This double taxation is a reason many people support ditching seperate corporate taxes altogether or at least lowering it substantially.

amluto 10y ago
> No, that's not how taxes work in the US. Business taxes are before, and in addition to your income tax. Businesses are either taxed as corporations (so they pay their own taxes and owners treat them as capital assets) or as partnerships (so their taxes are rolled into their owners' taxes but owners can distribute assets tax free). Trump is talking about changing the tax code, and partnerships don't currently have a tax rate, since they don't pay the corporate tax. It sounds to me like his proposal is to lower the rate paid by their owners. > Single member LLCs get special treatment - you only pay personal income taxes and self employment taxes, but not business income taxes. Multi-member partnerships, too. AFAIK the only thing that's special about single-member partnerships is that they don't file separately. This has no major effect on taxes paid.
- danielvf 10y ago
  What the White House memo actually said was "15% business tax rate". I don't see anything in what the White House actually said about replacing personal taxes with business taxes.

amluto 10y ago

> No, that's not how taxes work in the US. Business taxes are before, and in addition to your income tax. Businesses are either taxed as corporations (so they pay their own taxes and owners treat them as capital assets) or as partnerships (so their taxes are rolled into their owners' taxes but owners can distribute assets tax free). Trump is talking about changing the tax code, and partnerships don't currently have a tax rate, since they don't pay the corporate tax. It sounds to me like his proposal is to lower the rate paid by their owners. > Single member LLCs get special treatment - you only pay personal income taxes and self employment taxes, but not business income taxes. Multi-member partnerships, too. AFAIK the only thing that's special about single-member partnerships is that they don't file separately. This has no major effect on taxes paid.

danielvf 10y ago
What the White House memo actually said was "15% business tax rate". I don't see anything in what the White House actually said about replacing personal taxes with business taxes.