4 ms·

I guess I had a too simplistic viewpoint on the matter, how a contract is ended between two private parties shouldn't involve the government unless some form of

by talmand 10y ago

I guess I had a too simplistic viewpoint on the matter, how a contract is ended between two private parties shouldn't involve the government unless some form of criminal activity has been done. As for the compensation idea, I'm assuming you mean from employment, I would have to hope that's already covered by the income tax laws where there are guidelines in what determines compensation from employment and what is considered employment. Many people have tried many schemes around that one. Besides, even if someone tried something like that it's quite a bit different than a debt owed to the hospital because they performed surgery on you. But from what I'm reading from the links provided the government doesn't get involved until the owner of the debt files the form to involve them. Which seems odd in of itself to me. It's almost like a punishment placed on the party owing the debt from the owner of the debt through the powers of the state; which is odd since the owner has decided to not collect. But then again, I'm not familiar with laws governing debt so I'm sure there's some elaborate nuance I'm not understanding.

SilasX 10y ago
>I guess I had a too simplistic viewpoint on the matter, how a contract is ended between two private parties shouldn't involve the government unless some form of criminal activity has been done. If that were where it ended, we couldn't have income taxes :-P But as for the broader point: if you don't tax forgiven loans, you're effectively allowing a vector for untaxed income -- whether personal or business. I agree it gets a little trickier when the debt was for for a non-monetary good in the first place (e.g. surgical services), but many of the same concerns apply -- I may hide income by transacting it in the form of a service. You're right that public policy purposes may disfavor that sort of thing (e.g. counting charity surgical services as taxable income), but this is common -- there was the time someone won a free trip to space but refused because he'd have to pay taxes on its market value.

by talmand 10y ago

SilasX 10y ago

>I guess I had a too simplistic viewpoint on the matter, how a contract is ended between two private parties shouldn't involve the government unless some form of criminal activity has been done. If that were where it ended, we couldn't have income taxes :-P But as for the broader point: if you don't tax forgiven loans, you're effectively allowing a vector for untaxed income -- whether personal or business. I agree it gets a little trickier when the debt was for for a non-monetary good in the first place (e.g. surgical services), but many of the same concerns apply -- I may hide income by transacting it in the form of a service. You're right that public policy purposes may disfavor that sort of thing (e.g. counting charity surgical services as taxable income), but this is common -- there was the time someone won a free trip to space but refused because he'd have to pay taxes on its market value.