Lower-Income Tax Planning

46 Pages Posted: 24 Sep 2019 Last revised: 3 Oct 2019

See all articles by Manoj Viswanathan

Manoj Viswanathan

University of California Hastings College of the Law

Date Written: March 16, 2019


Tax planning is generally criticized by scholars as inefficient; that is, imposing welfare-reducing costs by incentivizing transactions with few non-tax economic benefits. This Article argues that this view is unacceptably narrow, and makes the original claim that tax planning by lower-income taxpayers is often welfare-enhancing and should, as a normative matter, be encouraged. As such, various parties, including the IRS, law school clinics, legal academics, and tax practitioners should actively strategize to reduce the transaction costs currently hindering lower-income tax planning. This Article then applies that mandate to a specific cohort of lower-income taxpayers — drivers working in the sharing economy — and proposes a strategy through which these taxpayers can take advantage of both existing tax laws and the §199A qualified business income deduction of the recently enacted Tax Cuts and Jobs Act. By judiciously operating their rideshare activities through S-corporations, rather than as sole proprietors, rideshare drivers can obtain significant tax savings.

Keywords: tax, TCJA, low-income, lower-income, tax planning

JEL Classification: K34

Suggested Citation

Viswanathan, Manoj, Lower-Income Tax Planning (March 16, 2019). University of Illinois Law Review, Forthcoming, UC Hastings Research Paper No. 338, Available at SSRN: https://ssrn.com/abstract=3438398

Manoj Viswanathan (Contact Author)

University of California Hastings College of the Law ( email )

200 McAllister Street
San Francisco, CA 94102
United States

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