Entries Tagged 'Taxes' ↓

Wake Up America!

The Scourges of Our Times

Thanks to human technology, coronavirus is a reminder that we are all part of a global economy. With the first case of unknown cause just one county away from me, and with seven weeks with the ordinary flu this year under my belt, I’m worried.

But more than this, I’m grieving the loss of what I thought was my proud country over the past three years. And I’m sad about the hardships so many of us are encountering when it comes to finances and hopes for a better future.

For the past four years I’ve written less and less because politics and the President’s daily doings have erased economics in the Trump era. Even conservatives who espouse Adam Smith’s political economy, Ronald Reagan, and right-wing libertarians aren’t getting much news coverage.

Why Our National Economy is Not Really Booming

Continue reading →

Trump’s Trade and Infrastructure Weaknesses

Today the Financial Times reports that American expatriats living abroad will have to pay higher taxes on any holdings in foreign businesses.

This is due to the hasty provisions Republicans put into their tax law to get mega-corportions like Apple and Google to bring back profits earned abroad to the United States.

But will those repatriation provisions to get US corporations to bring home more foreign earnings even work to create more jobs for Americans?”

The answer is “No!”

Why? Continue reading →

Wealth Transfer Ripoff for Taxpaying Workers

The GOP  ‘tax reform’ bill in the U.S. Congress purportedly contains a clause that will raise the standard tax deduction rate from $6,300 to around $12,200. That’s almost double. Don’t think this will save you a huge chunk of money!

Doubling the Standard Deduction

This supposed benefit will kill off self-employment and Social Security with one stone. But not in one year. Only after years of erosion will working people realize how they’ve been tricked.

Doubling the standard deduction on federal taxes paid by employed and self-employed people will raise the US government deficit too. Who is going to make up for the loss of tax revenues from increasing the standard deduction? Certainly not corporations and not the tiny number of individuals making large sums of money off of investments and real estate.

The Impact on Self-Employed Workers

This year – with regular standard deduction

Let’s say a self-employed professional, such as a freelance book editor, or a beautician or bookkeeper makes $35,000 net business income this year.

Currently, a self-employed person we’ll call Jan, would have to pay 12.4% of $35,000 for SE (self-employment tax). That comes to minus $4,340 SE tax.

Deduct $4,340 for SE tax from $35,000 and we get $30,660. This is Jan’s net business income which goes on Form 1040 as personal income from business.

The present standard deduction on personal income is $6,300. So we subtract $6,300 from $30,660 and Jan has $24,360 taxable personal  income.

Now subtract $4,500 for Jan’s individual personal exemption and Jan’s taxable income drops to $20,310

Jan’s $20,310 personal income is taxed at 15.3% and the government gets $3,107 in personal income tax from Jan. 

 Jan gets to keep $27,553 out of the $35,000 earned by the business ($30,660 after SE tax paid – $3,107 personal taxes)

Note: Self-employed persons pay twice as much SE tax as employees pay for FICA tax. Both taxes go toward Social Security and Medicare. (Employers pay for half of employees’ Social Security and Medicare taxes)

Self-employed people making under $127,200 a year of net business income must pay the full SE tax rate. However, the IRS does not levy income tax on the amount of earnings paid for SE tax. That would be double-taxation on the same money. Instead, self-employoed individuals get to deduct half of the SE tax from their net business income and half from their net personal income taxes.

Because self-employed pay the full SE tax, many self-employed persons will be far more negatively impacted by doubled standard deduction on personal taxes than employees. This bill will destroy many self-employed businesses. Continue reading →