Tax Policy

/Tax Policy

Failure of High Marginal Rates

Earlier this year, the Congressional Budget Office produced a report reviewing tax rates on labor income since 1962 that includes some important lessons for tax policy folks. The first lesson is that nothing replaces a really cool chart.  Take this heat map, for example.  What a great way to convey a lot of information all at once.  If you’re a taxpayer, the simple way to view it is lighter colors good, darker colors baaad. Our second lesson is how much more progressive the tax code has become since the 1960s.  Back then, nearly everybody paid statutory rates between 16 and ...

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Failure of High Marginal Rates2019-08-28T16:43:54+00:00

Treasury on 199A Guardrails

Remember this JCT chart from earlier this year?  It garnered lots of attention and called into question how the 199A pass-through deduction was structured.  If only 9 percent of all pass-through income was disqualified from getting the deduction, what was the point of having all those complicated rules? We wondered about the estimate at the time, as it didn’t comport with our member’s experience.  In our S-CORP survey this year, only half of our members expected to get the full deduction, while rest expected just a partial deduction or no deduction at all.  How was it possible the excluded income ...

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Treasury on 199A Guardrails2019-08-28T16:37:54+00:00

S-Corp Member Survey 2019

S-Corp sent its members a new survey this Spring.  The goal was to follow up the survey we did just after tax reform was enacted to see how things had evolved.  Now that our members had a year to digest the new rules, where did they stand?  Here are the key takeaways – Seven out of ten say their taxes went down or stayed about the same; Four out of five say making permanent the 20-percent 199A deduction is a priority; and Seven out of ten plan to remain S corporations in the near future. That’s not bad, considering where ...

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S-Corp Member Survey 20192019-07-30T15:41:30+00:00

The Myth of Corporate Decline

The visual economist issued another great chart last month, this time showing the largest public companies by market cap. Our first reaction is, wait, Microsoft is number one?  When did that happen?  All the focus on FAANG stocks (Facebook, Amazon, Apple, Netflix and Google) and stodgy old Microsoft is bigger?  Go figure. Our second reaction is “Gee Grandmother, what big market caps you have.”  These companies are huge!  And that’s not limited to the ten companies illustrated here.  Measured against GDP, the market cap of all public companies in the US has tripled since 1986. The irony is that this ...

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The Myth of Corporate Decline2019-07-26T16:50:37+00:00

S-Corp Mod Introduced in Senate!

Senators John Thune (R-SD) and Ben Cardin (D-MD) today introduced S. 2156, the 2019 version of the S Corporation Modernization Act.  The new Modernization Act focuses on leveling the rules between S corporations and other business forms while increasing the opportunity for S corporations to raise capital.  Among other items, the bill would: Provide meaningful relief from the so-called “Sting Tax” passive income rules; Expand the ability of IRAs to invest in S corporation banks; and Level the tax-treatment of asset sales with sales of S corporation stock. As the Senators noted at the introduction: “While I believe we’ve made ...

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S-Corp Mod Introduced in Senate!2019-07-18T19:11:57+00:00