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Thread: if you dance in ANY US city ... this new law will affect you !

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    Default if you dance in ANY US city ... this new law will affect you !

    from a professional investors' BBS ...

    (snip)"Should you want to verify this, go to , enter "HR 3590" in the search box and look for "CRS Summaries." This is what you'll find.

    Title IX Revenue Provisions—Subtitle A: Revenue Offset "(Sec. 9002) Requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer-sponsored group health coverage that is excludable from the employee's gross income (excluding the value of contributions to flexible spending arrangements)."

    Starting in 2011—next year—the W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are provided. It doesn't matter if you're retired. Your gross income WILL go up by the amount of insurance your employer paid for. So you’ll be required to pay taxes on a larger sum of money that you actually received. Take the tax form you just finished for 2009 and see what $15,000.00 or $20,000.00 additional gross income does to your tax debt. That's what you'll pay next year. For many it puts you into a much higher bracket. This is how the government is going to buy insurance for fifteen (15) percent that don't have insurance and it's only part of the tax increases, but it's not really a "tax increase" as such, it a redefinition of your taxable income.

    Also, go to Kiplinger's and read about the thirteen (13) tax changes for 2010 that could affect you. "(snip)


    The obvious take-away is that, beginning on January 1st, this one paragraph change in IRS tax law will immediately reclassify the 'equivalent cash value' of employer provided health insurance coverage to be additional taxable 'ordinary income' for every worker instead of a 'free' employee benefit. This in turn will mean that a club customer currently earning say $ 50,000 per year in salary plus $15,000 in 'free' employer health insurance ... and paying perhaps 10% of that amount or $ 5,000 per year in federal income tax on that $50,000 income ... will face a huge change.

    While that club customer's $50,000 salary won't change, from a legal standpoint this new law is equivalent to the employer increasing the club customer's salary to $65,000 and then subtracting the $15,000 employer's cost of health insurance coverage for that employee and his family. This however will translate into the employee having to pay federal income taxes based on the new $65,000 amount ... amounting to perhaps $7,250 instead of $5,000 due to the progressive income tax rates applying a 15% tax rate to the additional $15,000 in health insurance benefit cost 'income' ( assuming that the club customer is married ).

    Even though this will probably be called a National Health Care related 'rule change' instead of a 'tax increase', the fact remains that the club customer will wind up having to pay $2,250 additional dollars in federal income taxes on the SAME salary ... which in turn means that the club customer will have $2,250 a year less money available to spend on non-essential items such as lap dances !

    I would also point out that, based on whatever actions do or do not take place between now and the end of the year in regard to expiring GWB tax cuts, for many single club customers the additional taxes resulting from the above 'rule change' could be involve a much higher percentage ( i.e. 28% if the GWB tax cuts are allowed to totally expire ). Thus in the same $50,000 a year salary scenario, and perhaps $10,000 worth of 'equivalent cash value' of employer provided health care benefits, that single club customer will have $2,800 a year less money available to spend on non-essential items such as lap dances !


    For anyone that is interested, this and other tax changes are detailed at the Kiplinger's link referred to by the author - see
    ~
    Last edited by Melonie; 06-27-2010 at 09:32 AM.

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    Just because your W-2 form will now more accuratley a persons "total compensation" that does not "automatically" translate into a higher taxable income no matter how "obvious" to take away is to you and others.

    It COULD happen but from what I read it is NOT carved in stone that it WILL.

    On the other hand people that have had "Cadillac plans" for years and years, UAW workers is the best or worst depending on how you look at it example should have there "total income" refected, "perks" be it health insurance that pays for everything under the sun be it Manicures and pedicures as some kind of "preventive care" to trendy gym memberships that offer tanning and massages with or with out the happy ending to company cars or other freebies "because I work there" should all be reflected wheter it gets taxed or not is another discussion.

    The person who works at one of the "Wal-Marts" of the world that have minimal or no benefits and someone else who so far W-2 wise are the same but has "really good benefits" should NOT be viewed the same.

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    ^^^ agreed that there could still be some congressional action between now and the end of the year that could put off the taxation of 'free' employee health care benefits ... just as some congressional action between now and the end of the year could limit the rate of across the board income tax rate increases on 'ordinary income'. However, what IS carved in stone is that if no additional action is taken on the part of the current congress, tax rates ARE going to increase based on the verbage in existing laws ... and not just increase for those earning more than $200k a year either.

    If you check out the '99 weeks of unemployment benefits' thread, it is clear that right now the congress is NOT in a mood to vote for further increase gov't deficit spending even if that makes constituent groups unhappy. If you check out the 'Rep Hoyer on NO Federal Budget this year' thread, you will also see that the groundwork is being laid to increase taxation of the US middle class in order to stop gov't deficit spending from growing larger, presumably as a political counterbalance against the gov't cutting off extended unemployment benefits, the gov't firing some teachers, cops and other gov't employees etc. In that framework the 'stealth' nature of the new 'rule change' on taxation of employer provided non-cash health care benefit value would seem to be a politically less damaging alternative ... especially since no congressional vote would be required to simply let current law take its course allowing de-facto tax increases to occur 'automatically' at the end of 2010 ... which adds to the plausibility of a 'no new votes on taxes' scenario

    ~
    Last edited by Melonie; 06-27-2010 at 12:59 PM.

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    Default Re: if you dance in ANY US city ... this new law will affect you !


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    Default Re: if you dance in ANY US city ... this new law will affect you !

    Again just because a certain dollar amount starts getting reflected in some box on your W-2 does not "automatically" translate into that amount being ADDED to your "taxable income" they could simply be there to be used when considering your eleigibilty for other things, credits, for example all the variuos "because you have a kid" credits, EITC, Child Care, the ones that you get for no other reason than you have one.

    As far as this saw about how letting the "Bush tax cuts " expire is raising taxes, well go to Websters and look up "temporary" temporary ENDS. The Bush tax cuts were sold to the country in general and the congress in particular as being just that TEMPORARY. If the WH wanted them to be "permanent" then they should have sold them as such, they didn't they knew or feared that didn't have the votes for that, so they lied there way through with this "don't worry they are only temporary" crap and even with that "concession" they didn't pass by all that much, since then all we have ever heard is how they just must be made permanent or every bad thing you can name will happen.

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    spin this any way you want to, but any move by the government / IRS that leaves club customers with fewer after-tax dollars available from the same amount of 'earnings' to spend on non-essential items like lap dances is NOT a good thing. If you choose to rely on semantics and definitions to refer to the gov't taking more tax money out of the same sized paycheck as something other than a tax increase, then so be it. But it will still mean that club customers will be handing over more money to the gov't thus leaving less money for them to hand over to dancers !!!

    For a second time I'll agree that congressional action is still possible between now and the end of the year which could mitigage tax changes that are otherwise on 'autopilot' under existing law to take effect at the end of the year . These involve increases in tax rates on 'ordinary income', decreasing the income threshold at which 'Alternative Minimum Tax' provisions begin to disallow tax deductions, an increase in the capital gains tax rate, potential taxation of the cash value of employee health insurance benefits etc. ( via eligibility denial for other tax credits or via interaction with the AMT threshold if nothing else).

    It is unknown if such congressional action will actually be taken ! However, taking such action would involve nationwide publicity of the issue, taking names in regard to which senators and representatives vote to 'increase the amount of money taken from workers' paycheck', a nationwide discussion of the semantics issue of whether taking more money from worker's paychecks is to be called a tax increase or not etc. IMHO this is highly UNlikely to occur prior to the 2010 election, for obvious reasons. There has been some discussion of a 'lame duck' congressional session in November or December being used for such a vote if the Democrats lose their current house and senate majorities on election day, but that is a long shot.

    ~
    Last edited by Melonie; 06-28-2010 at 03:09 AM.

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    WRONG here
    While that club customer's $50,000 salary won't change, from a legal standpoint this new law is equivalent to the employer increasing the club customer's salary to $65,000 and then subtracting the $15,000 employer's cost of health insurance coverage for that employee and his family. This however will translate into the employee having to pay federal income taxes based on the new $65,000 amount ... amounting to perhaps $7,250 instead of $5,000 due to the progressive income tax rates applying a 15% tax rate to the additional $15,000 in health insurance benefit cost 'income' ( assuming that the club customer is married ).
    This is a stupid statement. The employer doesn't subtract that, and they employee still gets the health insurance; The employee is required, according to the article, to pay tax on that benefit.

    Misleading statements like that abound in right-wing rag articles, as scare tactics. Like the articles saying doctors would now get 21% less fees from Medicare. when it was not a law, only a bill. since then it failed as a bill, as it has every year for the past several. This insurance change claim needs to be verified also. I would much rather believe the Snopes refutation of this than the SPIN of some right-wing rag.

    Snopes said the additional W-2 data would be used for placing excise taxes upon the insurance carrier for "Cadillac insurance plans." Once again the SPIN is with the right-wing article and its interpretation against the FACTS.
    Last edited by threlayer; 06-28-2010 at 08:59 AM.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    ^^^ you may deem it stupid, but that is precisely what the potential new employer / IRS accounting rules point to in terms of tax treatment of the $15,000 'equivalent cash value' of employer provided health insurance benefits. Obviously there will not be a physical transaction of the employer 'paying' an extra $15,000 to the employee who in turn must pay the same $15,000 to a health insurance provider - but the potential tax treatment may be exactly the same.

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    Quote Originally Posted by phonehome View Post
    ...health insurance that pays for everything under the sun be it Manicures and pedicures as some kind of "preventive care" to trendy gym memberships that offer tanning and massages with or with out the happy ending to company cars or other freebies "because I work there" ....
    Gosh, I'm sure going to miss those happy endings at the gym club.


    (Realistically those happy endings are how I feel after a bath in Absorbine Jr and then a hot shower and a long nap after a rigorous gym session. The happy endings are only in my dreams about a couple of those gym gals.)
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    Quote Originally Posted by Melonie View Post
    ^^^ you may deem it stupid, but that is precisely what the potential new employer / IRS accounting rules point to in terms of tax treatment of the $15,000 'equivalent cash value' of employer provided health insurance benefits. Obviously there will not be a physical transaction of the employer 'paying' an extra $15,000 to the employee who in turn must pay the same $15,000 to a health insurance provider - but the potential tax treatment may be exactly the same.
    Did you read the Snopes article?

    http://www.snopes.com/politics/taxes/HR3590.asp

    There is no tax on employer provided health insurance benefits unless it costs more than $27,000.

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    ^^^ again a correct but isolated true statement ... intended to lead readers to an incorrect conclusion.

    Snopes does not address the potential issue of the 'equivalent cash value' of employer provided health insurance benefits triggering the AMT at a lower level of 'ordinary' income. Snopes also does not address the potential issue of the 'equivalent cash value' of employer provided health insurance benefits being included in eligibility calculations for various tax credits. Both would result in more tax dollars being paid out on the same amount of 'ordinary' income, even though the additional tax dollars being paid out would not be a direct result of new direct taxation of employer provided health insurance benefits.

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    AMT is the wild card here.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    ^^^ indeed it is !



    Unless the US congress successfully passes another 'AMT Patch' law between now and the end of the year, in 2011 the thresholds for AMT will potentially revert to $33,000 income for a single person and $45,000 for a married couple.

    For anyone unfamiliar, the mechanism by which the AMT works is to 'disallow' federal tax deductions as incomes rise above the AMT threshold. This is particularly painful for residents of high tax states like California, New York, New Jersey etc. because the AMT will 'disallow' full deductions for state and local taxes paid. This is also painful for mortgage holders, since the AMT will 'disallow' full deduction of mortgage interest paid. This could be even more painful if, as speculated, the 'equivalent cash value' of employer provided health insurance benefits winds up counting toward the income level upon which the 2011 AMT threshold is based.

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    Melonie

    Here is the thing you keep talking in terms of "will", this that and the other thing WILL happen and keep saying that it WILL happen unless congress does take action to "prevent it.

    Just because it is your "obvious take away" does not make it reality

    The REALITY is that due to this change, this that and the other thing MIGHT happen, might happen someday, maybe way after 2011 if ever! There is a huge difference between stating that soming will absolutly happen starting in 2011 and stating that maybe it might and as things stands maybe it might is the accurate way to say it.

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    ^^^ your point is factually valid. For the third time in this thread I'll again state that congressional action could be taken by the end of the year to change the already known future tax consequences of existing laws re tax brackets, re AMT thresholds etc. However, lots of people and businesses are NOT in a position where they can wait until January of 2011 to actually see what happens, versus taking actions NOW based on probabilities of what is going to happen.

    Along that line, probability says that if existing law will result in tax increases, and if passage of a new law mitigating those tax increases will require congress to go on record with new votes just prior to an election, that no such vote is going to be realistically possible. Based on that probability, rich Americans are already accelerating income into 2010 to avoid potential steep tax increases in 2011, businesses are holding off on hiring and capital investment etc. Thus 'what MIGHT happen' cannot be so easily dismissed since it is prompting that particular economic actions take place right now.

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    Melonie

    You keep conflating apples with oranges and Bananas.


    You are correct if congress does not take action "the Bush tax cuts" (apples)will expire. If congress does not ake action the AMT (oranges) will remain "unfixed" But that has NOTHING to do with this W-2 issue. If congress takes no action this dollar amount will apear in some box on a W-2, (bananas0 that is it, no more, it so far as current law goes won't be "applied to anything" that will effect a taxpayers tax rate or amount of tax or size of refund. It MAY be used for any number of things in the future but that WOULD take congressional action to implement aside from the "excise tax" on health insurance companies offering "cadillac plans" and I am not even sure that, just that is in CURRENT law anything else is speculation at best.

    NOTHING else is on "autopliot" with respect to THIS law.

    This idea that all these people/companies are going now do X,Y or Z becasue they are afraid or think that 1,2 or 3 will happen down the road, well they are/were going to do those things all along and now figure that they just have a convient excuse to blame it all on.

    This "uncertainy" crap is just that, crap, it is just an excuse for people looking for one, cash for clkunkers was uncertain, home buyer tax credits were uncertain the price of all your gold going to 0 toimmrow is uncertain, after all it is only valuable because people say it is.

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    ^^^ it was not UNcertain that the end of 'cash for clunkers' tax credits resulted in a steep drop in new vehicle sales. It was not UNcertain that an end to 'first time homebuyer' tax credits resulted in a steep drop in new home sales. Yes it is UNcertain what exact form and amount that 2011 tax increases will finally wind up taking.

    But what is CERTAIN is that 2011 taxes will be higher than 2010 taxes ... which is prompting both individuals and businesses to take actions accordingly. It is also CERTAIN that the 'equivalent cash value' of employer provided health benefits is being collected by the IRS for some reason other than idle curiosity !!!

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    Default Re: if you dance in ANY US city ... this new law will affect you !

    Not only did clunkers and housing cause big drops, they caused big increases for that time. I doubt anyone in a political position expected that these programs would jump-start things and that no drop would happen subsequently. It is uncertain how many people actually realized that.

    We actually do know what that W-2 data box is for -- it is for people who have Cadillac healthcare plans, as already defined by the law.

    The meaning of the remainder of the argument is uncertain to me.
    Last edited by threlayer; 07-13-2010 at 10:42 AM.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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