Because the Senate tax bill includes no rules to limit the ability of professionals—like managers, lawyers, or doctors—to incorporate and have their labor income treated as corporate profits, a non-corporate business may elect to be taxed at the corporate rate. And that election will be simple, requiring checking a box on a form, no lawyers required, no elaborate paperwork needed. This tax sheltering will not only cost the Treasury a substantial amount of money, it will benefit the highest-income and most financially sophisticated Americans... https://www.brookings.edu/blog/up-f...shelter-for-wealthy-americans-c-corporations/ Seems to me the issue is not that the corporate tax rate is being lowered but rather that these types of professionals are allowed to pay their taxes at the corporate tax rate rather than at the individual tax rate, which would be much higher. It's easy. A doctor with a private practice just forms a corporation, pays himself a tiny salary from that corporation, and then collects the corporate profits. Then he doesn't have to pay the 45% tax rate. I can't believe ordinary people weren't aware this was going on. We're talking about upper middle class people who may be earning $160-350 thousand a year.
Favoring the highest earners amongst us was the sole purpose of the right wing tax cuts......make the rich richer,
And they deserve all that they get. They are far smarter, far better educated in difficult fields to cut the mustard; and far, far better than an average person. There's a very rich black doctor here. He won't let other doctors buy in, but permits them to work for him and keep a per cent of what they bring in. He travels the world now and doesn't work much anymore. Other doctors of all races and genders carry his load for him now. What they get is a decent living without going into a ton of debt to build their own facility. More power to this very smart, black doctor -- enjoy the good life built by hard toil and super brains. Capitalism is so beautiful.
There is another side to this too. A tax on doctors or health professionals would effectively end up being passed down to patients, and from an economic standpoint it doesn't make much sense having a tax on sick people. Because of the imbalance in supply-demand (the same thing that leads to high doctor salaries in the first place), I believe doctors would be able to shift most of a tax increase onto patients in the form of higher prices. The burden would fall mostly on people who need medical treatment.
it is now 39.6% - but note also that some states don't have corporate or gross receipts taxes just the same, matter of incorporation are generally up to the states so it doesn't entirely matter what the senate thinks or does
Tax on gross receipts and gross pay would be wonderful -- flat tax of 10% for all and government live within its means.
This is literally how it's always been. The only problem is that to do it you need to run a business, which is difficult, which is why you get tax breaks.
I doesn't have to be that difficult to run a business and certainly not difficult running a small business like that. A halfway decent bookkeeper to keep things straight and a few hours each year from an accountant to audit the books and you're good to go.
No, I run a business the quote I was replying to seemed to imply that the main difficulty was "running a business" A doctor is already running a medical business, the key difference in the article is whether to incorporate. And the article also applies to lawyers and managers
Down side of your argument rural doctors in private practice need to often do this to survive they are not often high income providers they may do okay but often due to community support and it guards them from lawsuits.
I've run several small businesses, and it's something I will probably never do again. If I'm a doctor looking to start my own practice I need at least two to three employees, a usable space which will either have above market rent or will require a substantial investment on my part. Not to mention the $10,000 at the minimum I need to advertise my new business
The article in the OP is about doctors, lawyers and mangers incorporating in order to have their income treated as corporate earnings. It's a simple tax dodge, it's not about setting up a complicated business. You don't need a place to operate out of (if you'll excuse the pun) because you're already a salaried employee of a medical business. Instead of your salary being paid to Jane Q Public MD and paying all the appropriate taxes, it's paid to Jane Q Public MD LLC. Jane Q Public then takes a small salary and the remainder is paid in a much more tax efficient way as dividends. None of the things you mention are required because you're not really creating a whole new business entity, you're just finding a different way to treat your salary.
While I'm sure that a hospital would be happy to make you an independent contractor to save costs, they certainly wouldn't be happy to pay you equal or less with the burden involved in having independent contractors. There's been many times where I ran a business and operated as an independent contractor to fill gaps in my schedule, and it was great, because as I was an actual business owner I received the tax benefits and found work. For someone running a business that provides a health service, not so much. In order to be an independent contractor you must set your own hours, so whoever hired you can't tell you when you work as long as deadlines are met, you must provide your own tools and equipment, and pay all your own taxes. So as a doctor, you would need to pay a service fee to the hospital every time you ordered blood work or imaging, because you're technically renting that equipment. You can't pay yourself a "small" salary, because the IRS would immediately flag you for tax evasion, because you are indeed a doctor and doctors don't make $25,000 a year. And whoever you worked for wouldn't have any control whatsoever in your scheduling, which makes it hard to run a business.
Did you read the article in the OP ? If not then I suggest you do because the points you raise are addressed.
