Have any highly paid CA tax payers looked into getting paid through a pass-through corp to get the 20% (edit: not 23%) tax deduction, especially with the SALT deduction elimination? Have you talked to your employer about paying you as a contractor company? Talked to a tax expert?
Passthroughs also have a 20% deduction, if you happen to be a certain kind of business. Interestingly enough, real estate investor is one of those kinds of biz... In either case, you’d need to be paid corp to corp. very few employers r likely to want to deal w this. But, if they did, you’d also lose your benefits, so you’ll need to negotiate all that into your pay, making #1 more unlikely to occur.
In a few years this will be the norm. Pay me $300k/year and I’ll spend it on what benefits I want.
Norm for who? Service industry workers? Or overpaid tech workers living in CA?
I'm looking into this. If correct you may be able get it all back. http://losthorizons.com
Approaching this from a common sense position, why would an employer *ever* want to do this and expose themselves to a NRLB review. And it’s not a 23% tax deduction, it’s a 23% tax rate.
Companies hire contractors all the time. This wouldn't be unusual for most tech companies like Google, Microsoft, etc. And no, it's a 20% deduction. You're probably thinking of the new 21% corp tax rate, but that's not the relevant one here.
Most companies don’t direct hire contractors. They use a contracting firm. There are labor laws that prevent many companies from doing this. Look up Tesla’s law suits claiming its drivers are individual companies. We have a whole portion of the executive branch that oversees this. 20% is not a guarantee. As with all deductions it’s up to that amount. And you still have to adjust for full FICA so don’t forget that. Pass throughs have been around forever. I have several. But it’s important to recognize what they are and not mythologize their ability even in the context of a new tax law.