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If we were to abolish corporate taxes, would this make it trivial to avoid paying taxes on any money above what you need for consumption by routing all your pay
by Eridrus 10y ago
If we were to abolish corporate taxes, would this make it trivial to avoid paying taxes on any money above what you need for consumption by routing all your pay through a shell company where you keep it until you need it? Seems like it would be essentially the equivalent of removing contribution caps on 401ks.
Interested to hear if there is a reason people couldn't do this, or why it doesn't matter.
- rebuilder 10y agoWouldn't this be the same as simply not taking money out of the corporation in the first place? I'd be more concerned about losing tax income from personal consumption complexly disguised as corporate spending.
- josho 10y agoThe moment the money is spent on something seen as personal benefit then tax is owed. During an audit, if you did something funny like repeatedly pay for dinners between you and your wife claiming it was a business meeting between corp x & y then I suspect the auditor will come down hard on that as an obvious abuse
- Eridrus 10y agoThis isn't what I meant. I meant using the corporation as an uncapped 401k which essentially lets you defer tax until years where you have less income, therefore paying less income tax.
- kemiller 10y agoThat's not what he's saying. He's saying you can just basically hoard your income there and pay yourself a smaller salary. You could invest tax-free until you take it out.