High Earners working in high tax States Going LLC

[william the wie]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

 

[Cellblock2429]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

/----/ Maybe Blue States could curb spending and reduce taxes -------- Naaaaaw.....

 

[william the wie]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

/----/ Maybe Blue States could curb spending and reduce taxes -------- Naaaaaw.....
View attachment 188004

I agree totally.

 

[william the wie]

NH and PA in the northeast are relatively low users of income and capital gains taxes so I would expect them to boom bigly in both jobs and employment stats.

 

[Penelope]

Explain what you mean.

 

[OnePercenter]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

What's new, it's been going on for decades?

 

[Stormy Daniels]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

This will only provide a benefit in extraordinary circumstances. If you are self employed, creating an LLC won't typically reduce your tax burden, because an LLC with only one member is merely a pass through.

Any employer who tries to basically reclassify employees into contractors so the employee can incorporate as an LLC will end up regretting the decision in the long run. Whether someone is an employee or contractor is not determined by a statement written on paper, it's determined by the nature of the relationship, the degree of control the employer exerts over the individual, etc. If the employer doesn't relinquish control over the individual's work the employer will eventually end up on the hook for any unpaid taxes.

 

[MPS777]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

/----/ Maybe Blue States could curb spending and reduce taxes -------- Naaaaaw.....
View attachment 188004

I think New York state should cut income taxes to a flat 5%, increase sales tax to 5%, and take a hatchet to the public sector pensions.

 

[william the wie]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

/----/ Maybe Blue States could curb spending and reduce taxes -------- Naaaaaw.....
View attachment 188004

I think New York state should cut income taxes to a flat 5%, increase sales tax to 5%, and take a hatchet to the public sector pensions.

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

Two pieces of bad news

The three worst state finances are found in CA, IL and NJ. Depending on what metrics you use NY doesn't necessary make the top five most financially screwed up states.

What is new is that the trendlines are going hyperbolic.

 

[Care4all]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

What's new, it's been going on for decades?

but more are than ever before because of the new corp tax cuts....

i heard mentions of this before they passed the bill...

 

[william the wie]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

What's new, it's been going on for decades?

but more are than ever before because of the new corp tax cuts....

i heard mentions of this before they passed the bill...

The problems are:

That states are not eligible for chapter 3 bankruptcy so catastrophic default will hit at least five states and perhaps as many as fifteen states

A federal bail out, if it comes, will come with a criminal investigation of state and local governments and a minimum set of conditions that will not be pleasant.

 

[percysunshine]

Or, we could just borrow more money.

 

[Darkwind]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

/----/ Maybe Blue States could curb spending and reduce taxes -------- Naaaaaw.....
View attachment 188004

I think New York state should cut income taxes to a flat 5%, increase sales tax to 5%, and take a hatchet to the public sector pensions.

The problem with that is that the unions have tied the pensions to the taxpayers in New York. Any shortfall in the pensions is by law, made up by the taxpayers.

The people of New York need to get better representation and do a hatchet job on public sector CBA's.

 

[william the wie]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

/----/ Maybe Blue States could curb spending and reduce taxes -------- Naaaaaw.....
View attachment 188004

I think New York state should cut income taxes to a flat 5%, increase sales tax to 5%, and take a hatchet to the public sector pensions.

The problem with that is that the unions have tied the pensions to the taxpayers in New York. Any shortfall in the pensions is by law, made up by the taxpayers.

The people of New York need to get better representation and do a hatchet job on public sector CBA's.

They will, after the state crashes.

 

[william the wie]

Or, we could just borrow more money.

That won't pass the senate and certainly not with enough to override a veto.

 

[OnePercenter]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

This will only provide a benefit in extraordinary circumstances. If you are self employed, creating an LLC won't typically reduce your tax burden, because an LLC with only one member is merely a pass through.

Any employer who tries to basically reclassify employees into contractors so the employee can incorporate as an LLC will end up regretting the decision in the long run. Whether someone is an employee or contractor is not determined by a statement written on paper, it's determined by the nature of the relationship, the degree of control the employer exerts over the individual, etc. If the employer doesn't relinquish control over the individual's work the employer will eventually end up on the hook for any unpaid taxes.

Then why is Microsoft a Nevada Corporation?

Bill Gates is also.

I own five companies that conduct business in the ten western States and all are Nevada corporations.

 

[Winston]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

I can easily understand the incentive to move "non-business" income into an LLC. Even reclassifying as a 1099 contract employee can be a win-win for both the employer and employee. The employer loses the responsibility for collecting FICA taxes as well as funding their half while the employee now enjoys a maximum 25% tax rate as opposed to 39.6%. While you take the increased responsibility for the FICA tax you can still net about a seven percent raise. But not really sure how a state loses out on the deal. In fact, it looks to me like they get some additional tax revenue. They are still going to collect the same income tax rate regardless of what one's federal tax rate is. Not going to change property tax rates or sales tax rates. And with that seven percent raise, well states will make out collecting the additional income and sales taxes that raise will generate.

 

[william the wie]

most states and blue states in particular require a percentage of federal income tax if you are/were a state resident for a single day. This is an outmigration preventative pure and simple

 

[Stormy Daniels]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

This will only provide a benefit in extraordinary circumstances. If you are self employed, creating an LLC won't typically reduce your tax burden, because an LLC with only one member is merely a pass through.

Any employer who tries to basically reclassify employees into contractors so the employee can incorporate as an LLC will end up regretting the decision in the long run. Whether someone is an employee or contractor is not determined by a statement written on paper, it's determined by the nature of the relationship, the degree of control the employer exerts over the individual, etc. If the employer doesn't relinquish control over the individual's work the employer will eventually end up on the hook for any unpaid taxes.

Then why is Microsoft a Nevada Corporation?

Bill Gates is also.

I own five companies that conduct business in the ten western States and all are Nevada corporations.

Bullshit. If that were true, you'd understand the difference between an LLC and a corporation.

 

[Brain357]

I didn't see this coming, the wife picked it up on NBR last night and she informed me of it when we went out to eat today. This only works on reducing state and local income tax and where your employer, if any, goes along with it. This will put much greater stress on states that are already in trouble and will result in ever lower public services.

/----/ Maybe Blue States could curb spending and reduce taxes -------- Naaaaaw.....
View attachment 188004

Then they would become federal leeches like red states...