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“Creates large incentives for the wealthy” Possibly abusive? Yes, but very hard for the IRS to catch. For instance, a dermatologist office might “crack” apart a skincare products business run out of the same office, share overhead expenses, and then try to assign as much of those overhead expenses as possible to the dermatology practice to maximize profits eligible for the deduction. The formalistic and largely arbitrary lines then allow for much gaming, including what we-borrowing from the election law context-call “cracking and packing,” pulling apart and combining businesses. Selling skincare products (eligible) but not being a dermatologist (not eligible). That means being an architect (eligible) and not a lawyer (not eligible). For those with higher incomes, this includes being in the “right” line of business. But, to be eligible for this tax cut, owners need to meet certain very complex criteria. economy.ĭavid Kamin: One of the largest tax cuts in the legislation goes to “pass-through” businesses-where income is taxed at the level of the owner rather than the business. We asked the authors to describe how some may take advantage of the new system, and how changes to the tax laws may affect the U.S. To gain a better grasp on the intricacies of the 2017 Act, NYU News turned to professors David Kamin (Law '09), Lily Batchelder, and Daniel Shaviro-tax law experts from the NYU School of Law-who co-authored a paper analyzing the sweeping legislation titled “The Games They Will Play: Tax Games, Roadblocks, and Glitches Under the 2017 Tax Legislation.” According to the authors, “Many of the new changes fundamentally undermine the integrity of the tax code and allow well-advised taxpayers to game the new rules through strategic planning.” The dueling partisan narratives left many taxpayers with a murky understanding of the law’s impact. Criticized by congressional Democrats as rushed and ambiguous, the law was defended by Republicans as a necessary overhaul to previous tax laws and a means to provide economic relief for the middle class.
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As the tax filing deadline nears, Americans continue to navigate tax season with curiosity and caution as they see the ways in which they are personally affected by the Trump administration’s 2017 tax legislation (originally known as the Tax Cuts and Jobs Act of 2017, but officially called An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018.).