S corporation shareholders could have higher tax rates. New Senate proposal will hurt the economy!

By Jeff Brooks, CPA for JBrooks Wealth Advisors, PC  a CPA and CFP firm.  jeff@jbrookscpa.com

My view is that taxes are much too high on business people.  I have clients who are paying as much as 50% tax when you take into account the payment of payroll taxes, income taxes,  personal property taxes, sales taxes.  This increase in S corporation shareholders taxes, would increase tax rates above 50%!   Fortunately I keep current on tax reduction. In my opinion, these proposed changes are nothing but wealth redistriction from income producers to non-income producers! I believe our country has been successful financially by motivating people to work harder and smarter.  Compare the old Soviet Union to the U.S. Even compare the old China to the new China and you will see the power of capitalism. Read Milton Friedman, Capitalism and Freedom and you will see what happens when capitalism is encouraged.  In my opinion, the result of taking money from these business people is that they will have less money to invest in their own businesses, invest in companies that need in capital to grow, lower employment. I think you get the idea!

 

From RIA:

Democrats’ bill would close S Corp employment tax “loophole.”

Late on April 24, Senate Majority Leader Harry Reid (D-NV) introduced S. 2343, the “Stop the Student Loan Interest Rate Hike Act of 2012.” Democrats said they would introduce a parallel measure in the House of Representatives.

The bill aims to keep the interest rate on college students’ loans from doubling on July 1, 2012, and would pay for the cost of keeping the current 3.4% loan rate in place by closing what’s seen as an S Corporation employment tax “loophole.” According to a summary of the legislation, the loophole would be closed by requiring those with incomes over $250,000 to include, for purposes of employment taxes, income received from a S Corporation or limited partnership interest in a professional services business. The change would target only those S Corporations that derive 75% or more of their gross revenues from the services of three or fewer shareholders or where the S Corporation is a partner in a professional service business.

The Good News:  The bill is not likely to be popular with Congressional Republicans.

 

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About Jeffrey Brooks

Jeffrey Brooks, CPA, CFP, MBA since 1976 has specialized in helping clients save significant taxes, help businesses increase their cash flow, revenues and profits while increasing their control and satisfaction. Jeff and his accounting firm sincerely cares about the happiness of his clients.

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JBrooks Wealth Advisors, PC.

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Address: 4647 N 32nd Street, Suite B245
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Email: jeff@jbrookswa.com