@bclintonk post #495 Here we are talking about compensation of an employee of a nonprofit. Why should they be treated differently from for profits? Paying an employee is doing a good deeds, an act deserving a tax break? For-profits have to pay taxes on high compensation. What’s so wrong asking nonprofits to pay tax if they are paying their employees high compensation? Nonprofits are already getting tax exempt on their earnings. Isn’t that enough? Should they also get tax breaks for paying a large sum to their employees? If you take that to extreme, you could set up a nonprofit and hire friends and family for very high compensation to run the nonprofit and pay no tax. They raise $10M and use up $9M in compensation. All that for no tax. Do you like that? If you ask me, I think they should also tax nonprofits earnings at some level. And increase funding in public universities.
@busdriver11 I read something about that earlier. It is related to the extra 3.8% healthcare tax on capital gains/dividends that survives in the new plan. I forgot how it morphed into 6% tho. It’s in one of the articles.
Re #500
In that case, why not eliminate the concept of nonprofits completely? Then no special rules needed for them, and no charitable contribution deduction.
Of course, that would be politically impossible, since nonprofits that politicians like (e.g. churches) would be affected. Plus there would be the practical issues of every small local charity having to do more accounting for tax return purposes.
Not much was spoken about corporate side of tax reform that I came across. I know they set out to remove deductions while lowering the taxes. I assumed lowering that much tax cannot be recovered simply from taking deductions away. I have my doubt that 15% tax reduction can be entirely covered by removing deductions alone.
That’s a different issue. Again I don’t think taxing an employee’s over $1M compensation is profit or nonprofit issue. Nonprofits’ earnings aren’t taxed just employees’ excessive compensations. Their operating budget takes a hit a bit. that’s all. BTW, I happen to agree to limiting accumulations in nonprofits, say tax over x amount. Let the smaller ones go but keep an eye out for entities with over billion for example. How many trillions are locked up in nonprofits? Should Gates throw around millions every year tax free as he sees fit? Does he really do that much good while we take the full burden of taxes? How much good nonprofits running high overhead do anyway? 90% overhead is not unheard of.
Here’s another higher ed related proposal - no more tax free undergrad tuition reduction for dependents of parents who are employees of the higher ed institution:
“The legislation would kill another provision that is
deeply important to college faculty members and administrators personally: Section 117(d) of the tax code allows employees of nonprofit universities and colleges to exclude from taxable income qualified undergraduate tuition reductions they, or their dependents, receive from their employer (or other colleges with which their institutions have reciprocity). This provision has long been a valued benefit colleges can offer that enables them to recruit employees at lower salaries than they might otherwise need to to compete.”
“As I noted earlier, they (NYT) call it a $1,182 cut, but fail to note that it actually is in excess of a 70% cut.”
Gosh, silly me, how could I forget the $1000 one can now buy a new car with or remodel their kitchen!
Just ran the numbers with one of the calculators. My grad student’s federal tax burden will go up 288% between the tuition waiver loss and the loss of the Lifetime Earning credit.
Big Oil is having a field day with the new tax plan…
https://jalopnik.com/what-could-happen-to-electric-car-sales-if-the-7-500-t-1820109797
Since the effective corporate tax rate is currently around 18-19%, it is theoretically possible (but politically difficult) to drop the rate to 20% and make it revenue neutral by culling credits and deductions. But since it is far from revenue neutral, any culling of deductions that may exist falls far short of what is needed to do that.
Basically, it looks like a big giveaway, rather than the promised “lower rates but elimination of special interest credits and deductions to make it revenue neutral” reform. Making it a big giveaway will reduce opposition from business interests that would otherwise have opposed removing their special interest credits and deductions (the biggest users of such would likely see their taxes increase, while businesses that use little or none would see their taxes decrease under that revenue neutral scenario). But a big giveaway to big business is not likely to be looked upon favorably by many ordinary taxpayers.
“Big Oil is having a field day with the new tax plan…”
It like everything that is needed for a better quality of life for all of us they want to destroy. We are becoming a joke.
They most definitely are NOT eliminating the vast majority of special-interest corporate tax breaks. A few tweaks here and there, no more.
The whole notion that we tax corporations too heavily is largely a myth. The average effective tax rate—what corporations actually pay, after all their special deductions and tax credits—is around 18%, That’s well within the range of what competitor countries charge. Granted, that’s an average—some corporations pay more, because they aren’t influential enough to get industry-specific tax breaks. And some pay a lot less, because their lobbying efforts have borne some pretty sweet fruit. It’s estimated that 20% of large corporations currently pay nothing at all. That’s why it would be sensible to wipe out all the special tax breaks and reduce the nominal rate to 20% and make everyone pay that. That would be fairer, and revenue-neutral.
But that’s not what they’re doing. They’re lowering the nominal rate to 20% while leaving almost all the special tax breaks intact. So it’s just a giant windfall for corporations. The net effect is that corporations will pay $2 trillion less in taxes. How will we pay for that? Well, first, the deficit will go up by $1.5 trillion. That’s built into the budget they enacted to allow this thing to go forward. The rest will come from increased taxes on individuals—not everyone, mind you, but many will pay significantly higher taxes. I’m one. I usually don’t mind paying taxes. As Oliver Wendell Holmes famously said, 'Taxes are the price we pay for a civilized society." But I do mind paying higher taxes in order to hand a giant windfall to corporations and the uber-wealthy. That’s just colossal waste of my hard-earned money.
I posted this ages ago but it does have a chart of what corporate tax deductions are being kept and which ones will be gone (it’s the last chart). Hmmm, the deduction for charitable contributions will be gone, so I bet those matching fund offers will be too. R & D expenses stays, but not “domestic production”. I’m not sure what that is but does it have anything to do with incentivizing keeping businesses in the US?
I think we just need AMT for corporations.
And for the super-rich too. It was invented for Leona Helmsley, right?
@Madison85 seriously?? They are taxing the free tuition offered to employees dependents??
No stone was left unturned to pay for this corporate giveaway.
I don’t mind paying taxes, but why should my taxes increase 2-3k per year so that corporations can get a 40% tax reduction? The savings will not result in more jobs. They will buy back shares, increase executive compensation and reward shareholders. Wages will remain stagnant as they pile more work on the worker bees.
What? They wouldn’t do that, would they? They will use the extra money to create new jobs and pay workers more, trust them! >:)
Actually the research universities will get hit the hardest. Basically, most graduate students can’t afford the burden of paying tax on the tuition waiver. Stipends are usually calculated based on what it costs for a graduate student to live. Assuming a $50K tuition waiver, they will have to add about $6800, more in high tax states, to the taxable stipend in order to leave the students able to live.
What will have to happen is that the cost of funding a graduate student will have to go up by about $7000 a year. That will be a larger burden on grants and will reduce the number of graduate students and the research output of the universities.
I was a graduate research assistant when the passed the 1986 law which taxed RA stipends. Previously only TA stipends were taxed. Since the law passed in August 86, it was too late for the school to increase the stipend. We had to bite the bullet. There were married graduate students who qualified for food stamps. They fixed it the following year, but it increased the loading on the grants.
I would rather we do away with the corporate tax completely. In turn I would end the ability of corporations to lobby and donate to political candidates or office holders.
From my years working in a tax agency I like low rates, broad base taxes and would have them only apply to individuals. No special rates for different types of income or products. I would also tax services which seem to avoid being taxed especially professional services.
I also would immediately do away with any taxes that are assessed because you employ someone
I would also tax the value of benefits in the same manner that regular income is taxed