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Old 02-20-2013, 08:04 AM   #21
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DW has additional revenue-generating ideas, but I told her that if she has to give up 50% of what she would earn she might as well hold off.
I don't understand this unless the ideas require a lot of negative energy or are one time things that could be put off until other income generators drop off. DW and I were in the top bracket for many years and simply saved the extra dollars. That is how we ERd. DW could have slacked off and earned less but that would have been like cutting off her nose to spite the tax man.
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Old 02-20-2013, 08:49 AM   #22
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I don't understand this unless the ideas require a lot of negative energy or are one time things that could be put off until other income generators drop off. DW and I were in the top bracket for many years and simply saved the extra dollars. That is how we ERd. DW could have slacked off and earned less but that would have been like cutting off her nose to spite the tax man.
Nothing comes for free. The extra revenue would demand more of DW's time and energy. When we cut the net in half, it is not worth it.
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Old 02-20-2013, 09:28 AM   #23
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J

Starting in 2014: People are keeping an eye on the "Small Business Health Care Tax Credit." .... this gimme might let a self-employed person who makes less than $50K from the business get a tax credit for up to 50% of the cost of health insurance (even if they have lots of other income from other sources and thus can't get the subsidy for low-income folks.) Cha-ching!
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The SBHCTC is a very interesting angle.
Yes, that could push a lot of people into starting a small business or contract work, something they could turn a profit on, just to get the discount?

Would this also encourage a business with 50 employees to hire self-employed contractors? They stay under the 51 count, and the self-employed can get a deal on their subsidy?

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Old 02-20-2013, 09:29 AM   #24
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Nothing comes for free. The extra revenue would demand more of DW's time and energy. When we cut the net in half, it is not worth it.
So you hit your own personal inflection point on the 'Laffer Curve'?

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Old 02-20-2013, 09:42 AM   #25
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Yes, that could push a lot of people into starting a small business or contract work, something they could turn a profit on, just to get the discount?

Would this also encourage a business with 50 employees to hire self-employed contractors? They stay under the 51 count, and the self-employed can get a deal on their subsidy?

-ERD50
I think the economy in the US has been moving increasingly toward contractors/entrepreneurs for some time. I think that contract work is viewed far more positively and is more common among the 20-something set. What has been missing in a lot of cases is access to stuff like healthcare. While there are plenty of shortcomings in the healthcare reform bill (which have been extensively decried here and elsewhere), there is also a set of reforms that make it far easier and more feasible for people to be contractors or entrepreneurs. I think that this is the economic silver lining to the reform law. I've always thought of myself as being a contractor that just has one client at a time and I would long ago have welcomed the opportunity to strike out on my own, but the structure of the market and the way healthcare insurance work have strongly mitigated against doing so. The reforms come at just the right time for me - I am heartily sick of full time cube work, have accumulated enough capital to possibly downshift, and watching DW's success is giving me a it more courage to strike out on my own and have more balance in my life. I will be putting in some more time to vest in retirement benefits at the end of the year and watch hhow the reforms play out, but if things look OK I am increasingly ready to jump. I don't think I would have felt the ability to do so without what looks to be guaranteed access to healthcare insurance.
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Old 02-20-2013, 09:48 AM   #26
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Would this also encourage a business with 50 employees to hire self-employed contractors? They stay under the 51 count, and the self-employed can get a deal on their subsidy?
Right. Or not even self-employed. If I ran a cleaning service and had 45 employees, I'd be interested in geting the next 10 folks from an outside labor "temp" source. So, establishing 49 person temp-help labor pools would seem to be a good line of business (all taking advantage of taxpayer-funded compensation subsidies).
Or, just be a "matchmaker" between businesses who need more workers and self-employed people taking advantage of this small business health care tax credit. Between the tax credit, solo 401k, and IRAs, it would be possible to have a fair amount of income before paying any tax. Just playing by the rules as written.
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Old 02-20-2013, 09:51 AM   #27
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What has been missing in a lot of cases is access to stuff like healthcare.
There's no doubt that increased labor mobility will be a net plus for the national economy and for workers. The issue will be the costs incurred by doing it in the way it is being done.
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Old 02-20-2013, 09:55 AM   #28
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There's no doubt that increased labor mobility will be a net plus for the national economy and for workers. The issue will be the costs incurred by doing it in the way it is being done.
Personally, I would have much rather seen the US move to a single payor system like the bulk of the rest of the developed world. But wish in one hand and crap in the other and see which one fills up first. We have what we have, so make the most of it.
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Old 02-20-2013, 10:05 AM   #29
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For a small reduction in TI you could have her hire the kids to 'help' with work. The limit would depend on what else you have set up for them and kiddie tax concerns. The payment to the kids could go to a 529 or a Coverdell to offset what you might pay for later in tuition depending on your philosophy. Alternatively, the kids could contribute their earnings to Roth IRAs - it keeps taxes low, but then again no $ in your hands.
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