Comments on: Hypothesis: Trump does not hurt his fellow Republicans in elections, and most Democrats don’t care.

By: hira

hira — Wed, 22 Feb 2017 12:27:40 +0000

Great Post

By: MikeN

MikeN — Fri, 17 Feb 2017 18:49:48 +0000

‘as a dividend’. If you mean taxed like a dividend, perhaps. All of the corporate income gets taxed as personal income.

There is no requirement that the money gets passed out to shareholders at all. Frequently, the company will only distribute enough to pay the taxes.

By: Wow

Wow — Fri, 17 Feb 2017 13:36:03 +0000

“But I am not a tax lawyer – only a patent lawyer”

Yeah, right.

You haven’t even been to law school.

Night course at Trump Uni?

By: RickA

RickA — Fri, 17 Feb 2017 13:10:49 +0000

MikeN #79:

I do know that S corporations are pass through for the owner salary portion – so I agree with you that the W2 wages paid are taxed at the individual tax rate.

But it is my understanding that the salary only needs to be reasonable – and that one of the advantages of an S-corp is that you can take other S-corp profit as a distribution, which is not W2 salary and so that portion avoids payroll taxes, such as social security and medicare.

The distribution portion is taxed as a dividend.

So if 100k is deemed “reasonable” an owner could set their W2 wages at 100k and pay themselves another 100k as a distribution, which would not be W2 wages.

But I am not a tax lawyer – only a patent lawyer, so I could be wrong.

That is what my latest CLE (continuing legal education) course taught me about S-corps.

By: curtis goodnight

curtis goodnight — Fri, 17 Feb 2017 07:01:52 +0000

Greg- 1] gerry mandering and the rural dominated senate pretty much locks out dems for quite awhile – but the tea party MAY have taught them about the need for an incessant drumbeat of local activism. we shall see. But there was a relatively IMHO for the dems to have at least gained the presidency- the merely had to get out in front of the whole cannabis legalization issue- the election hinged on a relatively small amount of mostly young white voters who switched from Obama to Djt… simply to have supported a narionwide legalization effort [ 60% support in polls] likely would have swung it- but no! that would have required OMG a tiny risk. My informal “poll” suggests that millenials sat out in large part because they saw dems as merely spineless pro pols who inevitably stood only for what was a safe way into power…. sure- many of us saw the approaching Bloatorange Hindenburg headed towards us as reason to vote but but damn near as many just shrugged… and not even an apology from the DNC… thanks for nothing …

By: MikeN

MikeN — Fri, 17 Feb 2017 03:42:13 +0000

Not dividends. For S Corp, the corporate income tax is paid directly as personal income tax with those rates.

By: Corey

Corey — Fri, 17 Feb 2017 03:11:45 +0000

(ClimateBrawl™ : Anything less would be consent.)

By: Corey

Corey — Fri, 17 Feb 2017 01:42:41 +0000

Ricky,

So you’re justifying the reversal by asking, “What took so long?”

Trash.

By: RickA

RickA — Fri, 17 Feb 2017 01:36:43 +0000

Corey #74:

Not a big setback.

In order to be rolled back, the rule had to go into effect less than 60 days ago – so corporations could dump waste all the way through the Obama admin up until 60 days ago.

I guess it was ok before then?

Or else why did Obama wait until the waning days of his administration to put the rule into force.

By: RickA

RickA — Fri, 17 Feb 2017 01:34:20 +0000

MikeN:

I completely agree.

The “rich” would not make 100,000 of W2 income.

Also, of course incomes vary year to year.

The data I posted was only for the 2013 tax year.

The “rich” S-Corp owners get to set their salary at a “reasonable” level – which the IRS looks at closely.

That portion of their salary is W2 and they pay social security and medicare on it.

The rest of their profit can be paid out as dividend income, which is taxed at 20% for taxpayers paying the top rate of 39.6%.

So the “rich” would pay a higher overall rate than the 20% I used in my example – a blended rate of 39.6% for W2 and 20% for the dividend portion.

The major advantage of S-corps is that on the dividend portion they don’t have to pay social security and medicare taxes.

I am sure you knew all this – but I thought the others might not know the reason small business owners like S-corps.