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Taxing Families Like Companies

americancompass.org

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Re: Taxing Families Like Companies

#41

Post by slg »

encoderer wrote: post #15
prepend wrote: post #2

> As a result, families pay a disproportionate share of federal tax receipts This is simply because companies pay money to individuals who then pay taxes. This is a feature not a bug as taxing companies is less efficient from just having employee pay as a deduction that gets taxed downstream. Trying to tax this money before it gets to employees would result in double taxation as the company would pay and the individu…

You’re talking about why we can’t treat corporations like families with higher tax rates. To me the more interesting question is more about treating families like corporations. We had a nanny for a year. She made about $50k, but I had to pay her with after-tax income so the actual cost of the nanny was closer to $70k of my pretax income. This is the precise double taxation you’re talking about. Yes, higher income peo…

Exactly. I feel like a lot of people here either didn't pay attention to the article or are using it as an opportunity to go on a tangent about corporate/family taxes. The disconnect between the two is listed clearly in the second sentence of the article. Companies are predominately taxed on profit. Families are predominately taxed on revenue. That drastically decreases the tax burden for high revenue businesses and drastically increases the tax burden for families that are barely getting by (i.e. low profit).

Re: Taxing Families Like Companies

#42

Post by TeMPOraL »

mikepurvis wrote: post #35
fbelzile wrote: post #26

Earlier quoted context omitted.

I think a big problem is that the number of employees required to run many types of businesses has been steadily decreasing over time as technology improves. McDonald's for example went from 440,000 employees to 205,000 from 2012 to 2019 [1]. Multiply that out to include manufacturing companies and it's pretty easy to find the reason governments are strapped for cash. Maybe it's time to tax automation? [1] https://ww…

> Maybe it's time to tax automation? 1000% yes; I work in industrial mobile robots and it's obvious that governments need to find a way to capture some of the value which is being created there, particular when it's a more-or-less direct trade of a wage-earning employee for a one-off capital investment. Are there are any major proposals yet for how this might work, or has already worked? The "existing" section on thi…

> Are there are any major proposals yet for how this might work, or has already worked?

I don't know of any direct proposals, but I know of one thought: if you look at it, tax on fuels is partially a tax on automation already - machines use energy (be it electricity, heat or pressure), so there's a tax here that is proportional to use of machines. Of course it seems very low if treated as "tax on automation", and it's going to be easy to work around with off-the-grid, local power generation.

Re: Taxing Families Like Companies

#43

Post by xapata »

fbelzile wrote: post #26
prepend wrote: post #2

> As a result, families pay a disproportionate share of federal tax receipts This is simply because companies pay money to individuals who then pay taxes. This is a feature not a bug as taxing companies is less efficient from just having employee pay as a deduction that gets taxed downstream. Trying to tax this money before it gets to employees would result in double taxation as the company would pay and the individu…

I think a big problem is that the number of employees required to run many types of businesses has been steadily decreasing over time as technology improves. McDonald's for example went from 440,000 employees to 205,000 from 2012 to 2019 [1]. Multiply that out to include manufacturing companies and it's pretty easy to find the reason governments are strapped for cash. Maybe it's time to tax automation? [1] https://ww…

Maybe not automation, but it is reasonable to tax the externality, which is disruption. Taxing the speed of change of number of employees commensurate to the difficulty those employees have in finding new employment. Then pump the proceeds of that tax into unemployment benefits and training.

Tough to implement.

Re: Taxing Families Like Companies

#44

Post by slg »

xapata wrote: post #40
encoderer wrote: post #15

Earlier quoted context omitted.

You’re talking about why we can’t treat corporations like families with higher tax rates. To me the more interesting question is more about treating families like corporations. We had a nanny for a year. She made about $50k, but I had to pay her with after-tax income so the actual cost of the nanny was closer to $70k of my pretax income. This is the precise double taxation you’re talking about. Yes, higher income peo…

What if you don't earn income, would you say that the nanny's wage is lower?

Money doesn't magically appear. The money was earned at some point and likely went through some type of income or estate tax.

Re: Taxing Families Like Companies

#45

Post by ArkanExplorer »

sokoloff wrote: post #4

Of all the potential problems facing our species, running out of new people does not seem to be a concern at all. I’m not surprised that during a worldwide pandemic, our birthrate fell in a society marked by ready access to effective contraception. I don’t think it’s reasonable to draw a straight line through that and worry about declining population, but I suspect this was written to be read about as reasonably as “…

People are not created equally. There is a heavy negative correlation between IQ and education, and fertility.

https://www.sciencedirect.com/science/article/abs/pii/S01602....

"There were strong negative correlations found between national IQ and three national indicators of fertility."

In many parts of the world, the primary occupation has been, is, and forever will be - subsistence agriculture, with a typical IQ of the country in the 60s/70s. In these countries the fertility rate is ~6.0.

In many European and East Asian countries, responsible for essentially all of mankind's technological achievement over the past centuries, the fertility rate is typically 1.50 or lower.

As the age pyramid flips, more of the productive effort of these latter countries goes towards funding the welfare state, and the capacity for development and advancement is limited. The burden of maintaining this welfare state further diminishes fertility. Many countries are now in death spirals: https://en.wikipedia.org/wiki/Death_spiral_(insurance)

The idea that we should limit the taxation of families - the fundamental basis of civilization - is totally valid.

Re: Taxing Families Like Companies

#46

Post by xapata »

dalbasal wrote: post #37
prepend wrote: post #2

> As a result, families pay a disproportionate share of federal tax receipts This is simply because companies pay money to individuals who then pay taxes. This is a feature not a bug as taxing companies is less efficient from just having employee pay as a deduction that gets taxed downstream. Trying to tax this money before it gets to employees would result in double taxation as the company would pay and the individu…

> People who complain about “companies not paying taxes...” don’t understand the principles behind taxation very well It's true that people don't understand the principles or details very well, but it's also true that the principles are just a starting point on a convoluted road to a working understanding. Corporate income taxes are paid on profits. Individual income tax is on revenue. That's the principle. Square th…

Wealth is different from income.

Re: Taxing Families Like Companies

#47

Post by ianai »

slg wrote: post #41
encoderer wrote: post #15

Earlier quoted context omitted.

You’re talking about why we can’t treat corporations like families with higher tax rates. To me the more interesting question is more about treating families like corporations. We had a nanny for a year. She made about $50k, but I had to pay her with after-tax income so the actual cost of the nanny was closer to $70k of my pretax income. This is the precise double taxation you’re talking about. Yes, higher income peo…

Exactly. I feel like a lot of people here either didn't pay attention to the article or are using it as an opportunity to go on a tangent about corporate/family taxes. The disconnect between the two is listed clearly in the second sentence of the article. Companies are predominately taxed on profit. Families are predominately taxed on revenue. That drastically decreases the tax burden for high revenue businesses and…

I agree with correcting that discrepancy - but why stop at just families? I know society loves to say it's incentivizing family building - but it also creates scenarios adverse to society. Just make the tax code treat everyone the same and tax everyone on revenue minus costs.

Re: Taxing Families Like Companies

#48

Post by slg »

ianai wrote: post #47
slg wrote: post #41

Earlier quoted context omitted.

Exactly. I feel like a lot of people here either didn't pay attention to the article or are using it as an opportunity to go on a tangent about corporate/family taxes. The disconnect between the two is listed clearly in the second sentence of the article. Companies are predominately taxed on profit. Families are predominately taxed on revenue. That drastically decreases the tax burden for high revenue businesses and…

I agree with correcting that discrepancy - but why stop at just families? I know society loves to say it's incentivizing family building - but it also creates scenarios adverse to society. Just make the tax code treat everyone the same and tax everyone on revenue minus costs.

I don't think we want that extreme either because not all costs are equal. It is entirely different equation for a family making $50k to write off their groceries versus Jeff Bezos writing off a $400m superyacht.

Re: Taxing Families Like Companies

#49

Post by xapata »

dan-robertson wrote: post #36

In some sense it is reasonable to tax companies on profit rather than revenue as there are plenty of intermediaries who are good for the economy but who make tiny margins and therefore couldn’t survive if they were taxed on revenue. On the other hand, it seems there are insufficient incentives for companies to make a profit which then gets taxed rather than stashing cash in various ways or busting back stock (I think…

What's unconvincing about UBI? What'd you think of the 2020 unemployment benefits?

Re: Taxing Families Like Companies

#50

Post by stanrivers »

slg wrote: post #41
encoderer wrote: post #15

Earlier quoted context omitted.

You’re talking about why we can’t treat corporations like families with higher tax rates. To me the more interesting question is more about treating families like corporations. We had a nanny for a year. She made about $50k, but I had to pay her with after-tax income so the actual cost of the nanny was closer to $70k of my pretax income. This is the precise double taxation you’re talking about. Yes, higher income peo…

Exactly. I feel like a lot of people here either didn't pay attention to the article or are using it as an opportunity to go on a tangent about corporate/family taxes. The disconnect between the two is listed clearly in the second sentence of the article. Companies are predominately taxed on profit. Families are predominately taxed on revenue. That drastically decreases the tax burden for high revenue businesses and…

This is a summary of everything - well done. Taxing profits versus taxing revenues. So deductions and whatnot complicate that slightly, but not much.
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