5 ms·

The key word being "(drug) corporations" since they are large enough to afford this. This is beyond the reach of your average small company / startup. 'Little

The key word being "(drug) corporations" since they are large enough to afford this. This is beyond the reach of your average small company / startup. 'Little people' do pay quite close to the 35%.

parfe 15y ago
Do the little people pay that? Or do they take all revenue as salary and zero out the profit? Which is what I assume every small business does.
- iuytghyjuyh 15y ago
  Most small business take 0 salary and all of it as profits. Generally capitalist countries tax dividends (investment income) at a lower rate than salary (worker income) and you also avoid paying social insurance taxes.
- natnat 15y ago
  After you make about 375k, you have to pay 35% tax on every extra dollar of salary too.
  - deleted 15y ago
    [deleted]
  - Nrsolis 15y ago
    Source?
    - dangrossman 15y ago
      The IRS, that's the top income tax bracket. They're listed in the form 1040 instructions if you want to see it on paper.
      - Nrsolis 15y ago
        Actually, I was referring to the assertion that you're in the 35% tax bracket when your salary hits ~375K. There is a lot of confusion in this area, especially when things like pass-through entities (like LLCs and S-Corps) are involved. Keep in mind that salary income from an LLC or from an S-Corp is also taxed by Soc. Security and Medicare (the dreaded ~15% self-employment tax) while capital gains from an LLC/S-Corp isn't necessarily subject to it. My point (and I do have one) is that the tax picture is considerably murkier when there is a business involved, be it a small one or a large one. Income taxes for salaried workers are a relatively straightforward matter. Income taxes for owners of businesses are another thing entirely. Deductions for business expenses are just a small part of that circus. The rules for businesses are a BIG part of the tax code and responsible for much of the shenanigans. If you think paying $250 for H&R block to prepare your return is steep, try paying something like $15-$30K for a moderately complex return for an LLC. (NOTE: My next-door neighbor just retired from the IRS after 30 years doing small business audits and my ex-fiance is a tax accountant. I've also owned and filed taxes for S-corps and LLCs as a principal. Shit just got real.)
        dangrossman 15y ago
        I pay my accountant $275 to do the returns for my LLC. I keep my own books the rest of the year. I've been audited by the IRS and owed no money after the audit. Having a business doesn't automatically make things super complex. It's only complicated if your business is complicated.
        Nrsolis 15y ago
        Do you have employees? How about lots of capital assets with varying depreciation schedules? Do you operate in a business that gets different tax treatment for operating in a special zone? Do you get income from many states? Your situation isn't typical. In fact, it's probably an outlier. I know performers who have to file 43 different state tax returns.
- dangrossman 15y ago
  With income taxes, self-employment tax, state business & income taxes and 3 kinds of local business taxes, I'm losing more than 35% of every dollar and I'm not even making enough to reach the higher tax brackets. About "little people" in general, "little people" don't form C-corps, they trade under their own name (sole proprietorship), a DBA (sole proprietorship), or as a pass-through LLC or S-corp. There's no distinction between a company's income and your own, so you don't get to decide what is salary and what is profit, they're one and the same on the tax return.

The key word being "(drug) corporations" since they are large enough to afford this. This is beyond the reach of your average small company / startup. 'Little people' do pay quite close to the 35%.

parfe 15y ago

Do the little people pay that? Or do they take all revenue as salary and zero out the profit? Which is what I assume every small business does.

iuytghyjuyh 15y ago
Most small business take 0 salary and all of it as profits. Generally capitalist countries tax dividends (investment income) at a lower rate than salary (worker income) and you also avoid paying social insurance taxes.
natnat 15y ago
After you make about 375k, you have to pay 35% tax on every extra dollar of salary too.
- deleted 15y ago
  [deleted]
- Nrsolis 15y ago
  Source?
  - dangrossman 15y ago
    The IRS, that's the top income tax bracket. They're listed in the form 1040 instructions if you want to see it on paper.
    - Nrsolis 15y ago
      Actually, I was referring to the assertion that you're in the 35% tax bracket when your salary hits ~375K. There is a lot of confusion in this area, especially when things like pass-through entities (like LLCs and S-Corps) are involved. Keep in mind that salary income from an LLC or from an S-Corp is also taxed by Soc. Security and Medicare (the dreaded ~15% self-employment tax) while capital gains from an LLC/S-Corp isn't necessarily subject to it. My point (and I do have one) is that the tax picture is considerably murkier when there is a business involved, be it a small one or a large one. Income taxes for salaried workers are a relatively straightforward matter. Income taxes for owners of businesses are another thing entirely. Deductions for business expenses are just a small part of that circus. The rules for businesses are a BIG part of the tax code and responsible for much of the shenanigans. If you think paying $250 for H&R block to prepare your return is steep, try paying something like $15-$30K for a moderately complex return for an LLC. (NOTE: My next-door neighbor just retired from the IRS after 30 years doing small business audits and my ex-fiance is a tax accountant. I've also owned and filed taxes for S-corps and LLCs as a principal. Shit just got real.)
      - dangrossman 15y ago
        I pay my accountant $275 to do the returns for my LLC. I keep my own books the rest of the year. I've been audited by the IRS and owed no money after the audit. Having a business doesn't automatically make things super complex. It's only complicated if your business is complicated.
        Nrsolis 15y ago
        Do you have employees? How about lots of capital assets with varying depreciation schedules? Do you operate in a business that gets different tax treatment for operating in a special zone? Do you get income from many states? Your situation isn't typical. In fact, it's probably an outlier. I know performers who have to file 43 different state tax returns.
dangrossman 15y ago
With income taxes, self-employment tax, state business & income taxes and 3 kinds of local business taxes, I'm losing more than 35% of every dollar and I'm not even making enough to reach the higher tax brackets. About "little people" in general, "little people" don't form C-corps, they trade under their own name (sole proprietorship), a DBA (sole proprietorship), or as a pass-through LLC or S-corp. There's no distinction between a company's income and your own, so you don't get to decide what is salary and what is profit, they're one and the same on the tax return.