No. A pension is a defined benefit (DB) plan. A rising stock market will not increase your benefits. But given that the majority of pension funds are under-funded, a rising stock market makes it less likely the pension fund will default.
As I said before, corporate tax is passed onto consumers through higher prices, making it a hidden tax. It also tends to make this form of taxation regressive.
It would be far better to have corporations untaxed, and directly tax the owners who receive the now higher profits. This would be a win-win. You get rid of the corporate shell games, and also get lower prices for consumers. And since owners tend to be more wealthy, it ends up being progressive rather than regressive.
You would have to tax dividends and capital gains at regular income rates for this to work. Otherwise being incorporated would allow you to pay way less in taxes. And I think this would increase the shell games, as it would be relatively easy to turn profit into LTCG.
Then there is this.
CEOs don’t plan to invest more if there is a tax break. No surprise – lots of companies are rolling in cash right now (lots hidden overseas). This tax plan is just a fraud all the way around.
Correct.
There would be shell games where small businesses will try to give their owners untaxed benefits rather than pay their owners taxable income to buy what people ordinarily buy with after tax income. Small and large businesses may try similar types of things with respect to employee pay versus untaxed benefits. Of course, if such shell games were to be prevented, expect a lots of tax law verbiage defining things like whether a business-bought vehicle that an employee uses is legitimately a business vehicle, or is being bought for an employee’s personal use with occasional business use in order to avoid being taxable compensation to the employee.
My employer hasn’t used lower tax rates to provide wage increases in the past and I don’t expect them to do so in the future, either.
Any savings (currently paying around 22%) will either be returned in dividends or used for more stock buy backs. I can pretty much guarantee it won’t be used to fund capital investments.
My DB pension was frozen 2 years ago and replaced with a D.C. Plan. We figured at the time that one would have to work two extra years to make up what was lost from the DB plan.
Oh, and they’re playing a shell game and using company stock from buybacks to fund the frozen pension.
H and I are fortunate in that we are covered by retiree medical. The company did away with it for new employees maybe 15 years ago. Our fear is that they will find a way to do away with it completely before we are eligible for Medicare.
Net result will be that H and I will pay more in taxes, the company and the CEO will pay less. Fewer $ in our pockets.
Holy JP Morgan. Are they serious?!! Taxing incentive stock options when they vest and not when they are bought?!!! Talk about killing innovation and startups in the US! The innovation will go to Canada.
You mean this?
https://www.marketwatch.com/story/unicorn-lobby-pushes-back-on-executive-compensation-move-in-republican-tax-bill-2017-11-13
That’s insane. What if your company isn’t public yet? How do you pay taxes on money you don’t have and can’t get?
Here is another analysis of the stock option related changes in the tax bills:
https://www.natlawreview.com/article/thanksgiving-tax-frenzy-new-tax-bill-proposes-executive-compensation-changes-could
Under the Senate bill, incentive stock options would continue to be treated the way they’re treated now, according to the link in #810. Because the AMT would be removed, they’d be even more attractive than they are now.
Exactly what those grad students about to be taxed in tuition waivers are asking. This plan is really awful.
Of course they would do this because this bill isn’t about cutting average person’s taxes.
“They also have made a calculated gamble to help speed their bill to passage on a party-line vote: Republicans revealed late Tuesday they would set all of their tax cuts for individuals to expire at the end of 2025, to comply with a procedural requirement. Their deep cut in the corporate tax rate would remain permanent.”
Regarding having corporations be untaxed and have the stockholders pay tax instead, @ucbalumnus said:
Many small companies are already either LLCs or S-corps, so they are pass through entities in terms of profits and losses. This proposal would not change behavior there.
On the other hand, large public companies that employ lots of people are driven by their stock price. Artificially depressing earnings would tank their stock price and get management thrown out.
Well, at least now they’ve revealed that middle class tax cuts are a sham. Do they honestly believe that employees will be making so much more in 10 years that they can afford a tax increase at that point?
The increased Child Tax Credit expires in 5 years. ALL the individual tax rate cuts expire in 2025. The reduction in the corporate tax rate is permanent. An estimated 13 million people will be uninsured if the individual mandate is repealed. But there’s a deduction for golf course owners!
Procedural question: I thought that if they passed a bill that was not deficit-neutral, they had to pass the Senate with 60 votes. Since this adds an estimated 1.5-1.7 trillion deficit, how are they passing it with 51?
(Not political! Just confused.)
The bill makes the individual taxes temporary, but the corporate taxes permanent. We can see the priorities here.
It has to be under that $1.5 which was the figure put into the budget resolution they recently passed. They added the cut to the ACA mandate to help them get under that figure. If it adds more than that they can’t do it under reconciliation and would need 60 votes and then there wouid be zero chance of it passing in the Senate. That is also why they have to make the individual tax “cuts” only temporary, because permanent cuts would add too much to the deficit.