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Comment by gogopuppygogo | Hacker News Reader

Great in theory till you realize that a corporate entity could just shelter profits for individuals in basically perpetuity.

Want a house? Have very profitable company get into real estate and buy a building/housing development/etc... and use some for corporate execs as R&D for future projects. Want a luxury vacation? Have company pay for trips or heck buy a boat/plane so the company can make it an executive retreat.

Income taxes shouldn’t exist in my opinion. The government can already tax consumption. Why do they need to bilk citizens out of both ends?

To pay for war. That is always the answer in the USA.

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Consumption taxes are harder to make progressive; that is, they tend to have a disproportionate burden on the poor, whose consumption is a higher fraction of their income. But that could potentially be countered by something like a UBI, which is a progressive measure.

Progressive consumption taxes are a thing. Flat sales tax, yes, those are regressive.

If a corporation owns my house and doesn’t charge me rent, then imputed rent is a taxable benefit. Same with a car.

If my corporation owns a biz jet, then there has to be a purpose to the travel it offers. The IRS is going to look askance at trips to Hawaii with your spouse and kids being explained as “for business”. Best case, they identify it as a taxable benefit and then you pax tax, interest, and penalties.

In general, I think there’s an overestimation of what the IRS hasn’t already cottoned to WRT people trying to live within a corporation.

Now family trusts are different, but that’s not the subject of discussion.

The corporation doesn't have to pay for these things for you to recognize a massive tax benefit from a 0% corporate tax rate. If you can route your earnings through corporation in this scenario then you effectively pay zero taxes on the delta between your income earned minus your annual expenses.

> Income taxes shouldn’t exist in my opinion. The government can already tax consumption. Why do they need to bilk citizens out of both ends?

> To pay for war. That is always the answer in the USA.

Almost every country in the world has income taxes, even neutral countries such as Switzerland ( https://home.kpmg/xx/en/home/insights/2011/12/switzerland-in... ), which haven't been in a war for 200 years.

I imagine most folks here are American, but not everyone is out to get the average US citizen, some ideas just are good ideas and at some point they basically become universal. The US government is not some special meanie, in this case :-)

Some countries have no personal income tax for citizens and residents. US did not have one for half of its existence and when one was created it was tiny. Now most governments treat their citizens as 2 classes: those that can be taxed to death and those that can receive for nothing in return. This is a big divide that is growing, not closing.

"Some countries" = maybe 10-15 microstates and tax havens.

https://en.wikipedia.org/wiki/Income_tax#Around_the_world

> US did not have one for half of its existence and when one was created it was tiny.

The US also didn't have highways, a public healthcare system, public education, etc. for a large chunk of its existence. When all you needed was a homestead and a rifle... you didn't need much to finance the government.

> Income taxes shouldn’t exist in my opinion. The government can already tax consumption. Why do they need to bilk citizens out of both ends?

If you tax ONLY consumption, taxes will simply be passed on to the last mile which is consumers.

Tax incidence is not that simple.

All the taxes are always paid by the consumers, corporations don't bring money from home to pay taxes, they just pass it to consumers.

Yes, at a high enough level of wealth you don’t need to own anything other then controlling shares in a corporation.

Your spending cash is just a loan from a bank to you backed by the value of your corporation.

All major assets are held by the corporation.

A global tax of some kind is the only way to slow the divide. As the growth of wealth is finally taxed, and inflation can start to eat away at it.

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