I think this is a very interested observation. It's not very practical however. I have some first hand experience with the rediculos amount of paperwork involved with book-keeping. This is not something I would like to deal with as a private citizens. There must be a better way to normalize the tax system that involves less bureaucracy and paperwork.
Taxing Families Like Companies
81–90 of 100 posts
Re: Taxing Families Like Companies
#82Wouldn’t this make all income tax avoidable? One simply needs to spend income received on capital assets (bigger house, fancy cars, yachts, etc).
Yeah, which is why it's a bad idea. The cost of living should be considered static (or possibly location-dependent), what should be fully deductible is the cost of making the money.
Re: Taxing Families Like Companies
#83Earlier quoted context omitted.
The standard deduction seems like a nod in this direction. Perhaps it could be increased to be in line with the average expenses of a middle class family. Personally, I don’t think people should be paying a cent of income tax until they’re well on their way to an upper-middle class income. Taxes should always be taken out of surpluses, and never make it harder to achieve a baseline level of comfort and stability. The…
I'd abolish the standard deduction. Rather, move it into the tax brackets. At an absolute minimum the 0% bracket should extend to the poverty line, I think 150% of the poverty line would be a better fence. The standard deduction basically says you don't get to deduct many things you should be able to deduct. All the games we play with deductions are a shell game by Congress to stealthily raise taxes on the poor/middl…
Good points. That’s probably a less complicated way of getting to the same result.
Re: Taxing Families Like Companies
#84> 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…
That’s because a nanny is a luxury, not a necessity. There’s lots of people who figure it out without a nanny.
There is a deduction for child care and it should be higher, but there’s no reason why your $50k nanny expenditure should be tax exempt.
This is what I meant by tax policies that would favor the rich. You’re trying to figure out how to deduct a larger amount than millions of people make. That wouldn’t be fair would it?
You don’t pay tax on your super cool vacation either. Even though it releases stress and is quite nice.
It would be impossible to figure out a fair amount. Instead they just give a standard deduction and incentivize certain things like charities.
Re: Taxing Families Like Companies
#85> 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…
So this is wrong on several fronts. First, taxing companies is not "double taxation". Companies are taxed on profits. Paying taxes on behalf of employees and paying taxes on profits are mutually exclusive. Second, not taxing companies allows the rich to disproportionately avoid paying any taxes. Person A earns $50,000pa and gets taxed on all of it. Person B earns $5m but is paid through a company but "only" spends $1…
I was comparing the issue of taxing companies on revenue instead of profits, like individuals are taxed on income instead of profits.
The current way is done to prevent double taxation.
Re: Taxing Families Like Companies
#86> 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 it's time to tax automation?
Special taxes are dumb because of the overhead and externalities.
Automation is already covered in that it results in either greater profits or greater payroll through higher wages, so either way it’s already taxed.
The incentive is for companies to be efficient by increasing productivity. This productivity is taxed through existing means. So unless you want to disincentive automation a special tax for it is bad.
Re: Taxing Families Like Companies
#87Earlier quoted context omitted.
Yes exactly. Thank you. Generally people should just assume that others with lived experience are not total idiots about it. One way to fix it is simply to let families use their SSN as the EIN for the employee, and remove that from your adjusted gross income.
So you think hiring a nanny should have special tax benefits vs e.g. paying a daycare? You realize daycares also pay the same payroll tax, should daycare patrons be able to deduct the daycare's taxes too?
Also, everyone pays the daycare with post-tax dollars, caveat the spending account deduction, the same way they'd pay the nanny. The nanny is a red herring.
Re: Taxing Families Like Companies
#88> 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…
This article is another conservative puff piece that doesn't belong on Hacker News. They are pushing for a flat tax which is a regressive tax.
How is a flat tax regressive?
How far from flat does it have to be to stop being regressive?
Re: Taxing Families Like Companies
#89> 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…
>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 individual would then pay again. So the corporation gets to enjoy low tax obligation, and push that obligation onto their employees. And that's a feature? The sys…
Companies are owned by people. The idea is companies push all profits to shareholders and employees. It’s fucked that people don’t understand this and think that taxing companies is somehow different than taxing people.
As long as taxes are paid the calculus should be in what’s most efficient. I don’t care if the company pays it directly or indirectly through people.
What’s actually stupid is that dividends are taxable. Since they are after tax the company pays taxes, sends the remaining money to shareholders as dividends. Then then the dividends are taxed at the individual level.
What’s even stupider is that is a company is a shareholder. It pays taxes on that dividend income, then distributes to shareholders.
It’s not the system that’s fucked, it’s your understanding of the principles of the system. I suggest a microeconomics 101 MOOC.
Re: Taxing Families Like Companies
#90> 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…
> 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. So if a company has a large revenue that it mostly reinvests and pays low salaries, very little tax would be paid on this revenue, and that seems okay to you? > People who complain about “companies not…
> So if a company has a large revenue that it mostly reinvests and pays low salaries, very little tax would be paid on this revenue, and that seems okay to you?
Certainly, of course. If they reinvest then they are spending capital on something so that company so taxes are eventually paid.
This is meant, I think, to encourage growth with the intent that there will be an eventual taxable event at a higher amount than if tax was paid earlier in the stream. I think this is why tax revenues continue to grow. The intent is to maximize tax revenue. There’s no reason to worry about companies like in your scenario because it doesn’t negatively impact taxes.
What might be good is to setup thresholds for deductible expenses to prevent corporate expense that are clearly luxuries. For example, meals are only 50% deductible. I could see setting up different classifications for private jets over commercial, country club dues, luxury hotels, etc.
It doesn’t seem fair that taxpayers subsidize corporations claiming expenses and offsetting taxes on country club dues and whatnot. Pretty bizarre and there are lots of setasides that clearly benefit rich people who work for corporations.