December 10, 2017

WHILE WE DO WANT TO DISCOURAGE EMPLOYMENT...:

Tax Plans May Give Your Co-Worker a Better Deal Than You (Patricia Cohen, Dec. 9, 2017, NY Times)

In most places, a dollar is a dollar. But in the tax code envisioned by Republicans, the amount you make may be less important than how you make it.

Consider two chefs working side by side for the same catering company, doing the same job, for the same hours and the same money. The only difference is that one is an employee, the other an independent contractor.

Under the Republican plans, one gets a tax break and the other doesn't.

That's because for the first time since the United States adopted an income tax, a higher rate would be applied to employee wages and salaries than to income earned by proprietors, partnerships and closely held corporations.

The House and Senate bills vary in detail, but both end up linking tax rates to a whole new set of characteristics like ownership, day-to-day level of involvement, organizational structure or even occupation. These rules, mostly untethered from income level, could raise or lower tax bills by hundreds or thousands of dollars for ordinary taxpayers and millions of dollars for the largest eligible businesses.

"We've never had a tax system where wage earners were substantially penalized" relative to other types of income earners, said Adam Looney, a senior fellow at the Brookings Institution and a former Treasury Department official.


...there are more thoughtful ways of doing so.

Posted by at December 10, 2017 9:28 AM

  

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