But then it's highly unfair to tax humans on revenue, but corporations on profit.
I think the right answer is VAT + externalities taxes (LVT, Cabon tax, etc.) + UBI, which is both very easy to enforce and perhaps net progressive enough. Re "progressive enough": I don't so much care if BWM owners are screwed over relative to private jet owners on paper, I think reducing work hours and propping up demand at the bottom with UBI will have a trickle-up effect.
There might be room for a wealth tax, but I think it might be less loophole-prone and better theoretically to attack that problem more directly and less monetarily in terms of socializing key natural monopolies, promoting coops, etc. Trying to financialize the big question of "who controls the means of production" I think might be just too difficult.
> But then it's highly unfair to tax humans on revenue, but corporations on profit.
Wow, it's a good thing we don't do that. Good news, the income you spend to further your business is deductible. We include a personal exemption for generic costs, child exemptions, mortgage exemptions, healthcare cost exemptions, retirement savings exemptions, and numerous others.
Additionally, the whole concept behind a progressive income tax is to tax people in a similar way to taxing them on profit. After all, percent of income spent on necessary goods goes down as income goes up.
But I don't think anyone wants a system where this is done by itemized receipts instead of with generalizations.
Huh?
How is it not unfair that, for example I can’t deduct rent from my income? A company would be able to do that.
What about amortizing the cost of my domicile over 30 years?
The personal exemptions are a sham and do not reflect the reality of high cost of living areas.
> How is it not unfair that, for example I can’t deduct rent from my income?
Tax policy isn't set by moral arguments, it's set by government need for revenue which is then tweaked by political pressure groups.
The reason why you can deduct mortgage interest but not rent has nothing to do with fairness, which is undefined and a massively ambiguous term, but because banks, which are the primary beneficiaries of mortgage subsidies, have a lot more political power in Washington than landlords, who would be the primary beneficiaries of national rent subsidies.
For states like the USA that print their own currency and enjoy tremendous global demand for their currency, taxes are less about revenue and more about controlling behavior and unemployment outcomes. Some argue that taxes are just a way to force demand for a currency the government has a monopoly on to ensure it always has _some_ value.
(Note: this is a rather polarizing theory and still somewhat young. The US Fed pulled off printing trillions last year and things haven't gone to hell yet do there's something there )
I get a tax rebate for rent. Maybe it depends where you live.
For a house, your net worth hasn't decreased by the cost of the house. A company wouldn't be able to deduct that. They can deduct for assets that depreciate.
A company cannot depreciate land, but they can depreciate the value of the buildings on top of it over a fixed period of time. So in addition to writing off the mortgage as an expense, you can also amortize it since the value of additions (not the land) decreases.
I'm not sure what you mean here. You can't write off a mortgage. You could write off interest, but not the value of the mortgage.
Real estate tends to appreciate in value, especially in cities. The company would have to get unlucky with their real estate to be able to write off a loss. Buildings don't usually depreciate.
They could allow their buildings to fall into a state of disrepair, hoping it would lower their value. But why would they? The can deduct the repairs. It's a legitimate expense.
As a business I can take out a mortgage and give you a rental for the exact same price. The income and “expenses” cancel out, so the profit of your business is zero. Since this rental is an income producing activity the IRS (and other tax bodies) allow you to depreciate (https://www.irs.gov/publications/p946) the value of additions on the land (I.e the building) on a straight line over a 28 year period. The basis of the depreciation is the value of the property, so you divide that over 28 years and can take that away from the income as well. Now I can transfer that cost to you in rent and the profit of my business is still zero. This is a benefit that is generally only available to corporations. Then there is prop 13 which is yet another mess.
I’m not an accountant, but I’ve studied enough of it in University to be dangerous.
It's fair that you don't pay tax when don't make a profit after taking depreciation into account.
Depreciation isn't a cheat code that lets you avoid tax on profit. If you depreciate the building more than its actual market value depreciation, you owe back what you deducted when you sell the building.
Yeah the whole US mortgage interest exemption is a special US thing, not a natural tax exemption available worldwide
Here in NZ there are NO tax exemptions for normal humans (well there is one single one for low income families with small children) - it means that our taxes are incredibly easy to file - if you have one employer you probably don't need to file at all, if you want to it's 2 pages on a web form, if you don't file and the IRD owes you money they'll probably pop it in your bank for you.
Oh, and our high marginal tax rates are ~10% lower than I was paying in California, and that includes free public healthcare
VAT + LVT + misc. pigeovian taxes probably wouldn't be enough to power society as is, let alone fund a UBI. You could maybe replace income tax with a progressive consumption tax or a wealth tax, but you'd need to replace it with something.
Yeah not sure what GP is saying. VAT can absolutely suck up a huge amount of money. The UBI makes it far less regressive, basically to the point I no longer care.
(VAT + UBI is great for everyone but those 90th percentile luxury-car-and-McMansion-owning inner ring suburb types that are the Democrat's favorite constituency :/)
Coupling a regressive tax with money transfer creates an inverse "V" shaped effective tax rate that will squeeze some part of the society (probably on the middle class).
If the taxes and transfers are diverse enough, one can reduce that problem by making them compensating each other, but if you make VAT + UBI make the lion share of the government's money flow, it will be a really large problem.
Yes the nadir of the V is the inner-ring BMW suburb class, I so disparaged. And I really meant it when I said I didn't care about them.
It might sound like I'm being a culture warrior chest-thumper about those "liberal elites", but I really do mean something more material / economic here. I think most of that classes struggles (and they do take on huge debts) would not be worsened by taking away their money.
- This is the class most thirstiest about getting their kinds into good schools without being able to donate their way in. But the scarcity of "good jobs" that motivates this credentialism relates to inadequate demand of the masses. Giving them more money won't help the fact that the Keynesian feedback loop has broken down, causing the job scarcity. (And really, consumption not work is the goal, we should fix the feedback loop by working less not consuming more, beyond guaranteeing basic needs.)
- This the class hitching lots of their wealth on real estate, but it's precisely because our cultural obsession with owning single family homes that good land (i.e. that with good access to the other good land where people need to go) is in perpetual short supply. Even if they are the "vacation home" winners of the current ponzie skin, the portion of winners will bleed away in successive generations if housing continues to be a "good investment" --- and thus unattainable to increasingly many people.
- Perhaps this class is less affected by expensive healthcare (other than the richer ones above), but would still benefit from it being cheaper. Not a majority of them is doctors or biotech researchers or whoever else benefits from our shitty healthcare system.
So yes, I think even if they are at the tax advantage nadir, they still are benefitting:
- Richer masses fix their job anxieties
- We should separately fix real estate and transit so they can be at peace in condos not mcmansions
- We should separately fix healthcare to their slight advantage.
Also, I sincerely hope and empowered working classes / lower classes will prevent the richest billionaires from emerging (at least more than transiently), so the 0.1% stuff should be far more of a theoretically problem as we get a "thinner vertical tail" power law.
I think the right answer is VAT + externalities taxes (LVT, Cabon tax, etc.) + UBI, which is both very easy to enforce and perhaps net progressive enough. Re "progressive enough": I don't so much care if BWM owners are screwed over relative to private jet owners on paper, I think reducing work hours and propping up demand at the bottom with UBI will have a trickle-up effect.
There might be room for a wealth tax, but I think it might be less loophole-prone and better theoretically to attack that problem more directly and less monetarily in terms of socializing key natural monopolies, promoting coops, etc. Trying to financialize the big question of "who controls the means of production" I think might be just too difficult.