We continue our look at the tax plans of the Democratic candidates for President.
Long-term capital gains and qualified dividends are currently taxed at a high of 20%, though most American's pay 15%, with those in the 10% and 12% brackets paying 0%. Of course, you have to tack on the aforementioned net investment income tax of 3.8%, so the rate reaches a high of 23.8%.Biden would increase the top rate on long-term capital gains and qualified dividends from 20% to 39.6% for taxpayers earning more than $1 million.
Given what Biden is proposing to do with the child tax credit -- more on that below -- it's hard to imagine that he would also reinstate personal exemptions, which were eliminated by the TCJA. Perhaps he'll be content to retain the higher standard deduction in exchange for the forgone exemptions, and make it up to families by providing his proposed nearly-tripled child tax credit.First things first: it's not a"loophole." It's just the law.
Or.....you could set up an S corporation, have the $2 million paid to the corporation, and pay yourself a $100,000 salary. You'll pay 15.3% on the $100,000 salary, but the remaining $1.9 million can be distributed to you without the imposition of payroll taxes. Not a bad deal. reversing the excesses of the Trump tax cuts for corporations, reducing incentives for tax havens, evasion, and outsourcing, ensuring corporations pay their fair share, closing other loopholes in our tax code that reward wealth not work, and ending subsidies for fossil fuels."
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