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> Under the latest proposal, people earning more than $400,000 a year and couples making more than $500,000 would have to pay a 3.8% tax on their earnings from
by PuppyTailWags 4y ago
> Under the latest proposal, people earning more than $400,000 a year and couples making more than $500,000 would have to pay a 3.8% tax on their earnings from tax-advantaged businesses called pass throughs. Until now, many of them have been using a loophole to avoid paying that levy.
This is raising taxes like a locked door is stealing, lol.
- pclmulqdq 4y agoMost pass-through structures already require you to pay social security and Medicare taxes in the form of the self-employment tax. This hits a lot of people really hard, since you are paying both the employer portion and the employee portion of these taxes. The only exception today is the S-corporation. However, S corp owners still have to pay themselves a reasonable salary (for consultants, this is usually set to 50% of their billing rate), and pay SS/Medicare tax on that salary plus payroll taxes. The loophole closure should only affect how S corps are taxed, and effectively would eliminate the benefit of them. I'm not sure it would get nearly as much money as these people think. Edit - the way this is worded makes me think that this is a 3.8% surtax on pass-through income, not just closing the S corp loophole. Pass through income is already the most heavily taxed form of income, and taxing it hurts small business owners the most.