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The tax code simultaneously strongly encouraged you to not consume goods/services but rather have a company consume them on your behalf. This is still pretty de

The tax code simultaneously strongly encouraged you to not consume goods/services but rather have a company consume them on your behalf. This is still pretty de rigeur in Japan, which results in situations like this regarding executive perks: Bob lives in an extremely desirable house, which he rents for hundreds of dollars per month. It is owned by the real estate arm of BigCo, where Bob is CEO. Bob doesn't own a car; BigCo has issued him a $250k company car. Bob's children attend private schools, receiving a scholarship from BigCo for emerging leaders like themselves. Bob is in reasonably good health, given his frequent use of a gym and country club (dues billed to BigCo), and his wife's cancer situation is entirely managed by their gold-plated health insurance policy. Bob is socially assured of a sinecure post-retirement like e.g. being on the board of directors of a company socially close to BigCo. Bob's salary is $90k a year. Phew; income inequality, solved. (The current standard in the United States is that most of the above fringe benefits would result in taxable income to the employee. This is close to the current formal rule in Japan, which adopted guidance very similar to the US' on about a 25 year lag, but the substantial give-and-take between tax authorities and employers/taxpayers makes the actual practice in Japan substantially more varied than in the US, including among firms which would consider themselves enthusiastically complying with the rules.)

telchar 9y ago
That's why replacing corporate income tax with personal income tax, which many here advocate, won't work. However that issue can be mitigated by taxing companies on the value of perks
- z3t4 9y ago
  In Sweden, both the individual and the corp is taxed the value of the perks.
  - tobyhinloopen 9y ago
    And in Germany & the Netherlands as well
- stevehawk 9y ago
  Corporate perks like that are taxed as personal income in the United States.
ci5er 9y ago
Yeah, but that in turn always screwed my US taxes when I lived/worked in Japan (as a native, not an Aoyama expat)
hsljekskfh 9y ago
that sounds a lot better than having more billionaires in the economy. even though everything is very highly priced, they have to justify it at least, and give other kids a chance at their weird scholarship.
adrianN 9y ago
I'm not a tax expert by a long shot, but I believe that here in Germany perks from your company count as taxable income. Company cars definitely do.
- adtac 9y ago
  What if you just "rent" them indefinitely?
- candiodari 9y ago
  Germany, like any other European country I know, charges 0% tax as long as a company doesn't pay it out to it's owners. Every other use (see next paragraph) is untaxed. In fact they pay less tax than individuals (no VAT). And of course, high incomes have such companies, that receive their salaries instead of them themselves. This is common and perfectly acceptable, in fact, as a consultant you are taken advantage of if you don't do that. How does it work ? One pays "proper" tax on a nice income they pay themselves indirectly (but 1/3 or less of their real pay) and then invest it in something that's some form of capital replacement business (buy something - rent it out) and grow that business all their career, and of course use it for perks, like free dinners, vacations, health care, education, hotels, cleaning service, ... There's even the more blatant ways to get untaxed pay. For instance renting your own house (you put an office room in your mansion, then "rent" it to your own company for a very nice rent. Untaxed, and legal) For tax purposes, of course, those aren't free dinners. Those are "sales negotiations", which are indeed also conducted in expensive restaurants. "Company conferences", not vacations. As for additional healthcare, that receives special tax treatment by default. Company cars (aside from being a necessity. You're socially judged in Germany by the car you drive. You want "senior consultant" ? Don't arrive in a Renault, or generally any car under $50k. Hell I know people who hack this system by using rentals, removing the stickers and using those to go interview). Anyway company cars are untaxed (0%) as long as their "primary use" is company business. Wanna bet how often that is true for higher pay individuals ? Oh and I've actually walked into the general management building of Deutsche Bank. I guarantee not one of the managers is paying a dime in tax on company perks, and yet ... that building is a palace. You can get free massages there. There's an exquisite restaurant (10 euro per meal). It's the best museum of German art in existence, by a HUGE margin, it's got sleeping rooms (which should be understood to be a free hotel service, because that's what they are), and of course, every business partner or "business partner" ... can be given access, again, for free. And all this service, for free, in the dead center of the city. Hell, the free parking alone is worth 500 euro per month. Can we please stop with the idea that Europe is somehow a more egalitarian place than the US ? It's not. Also no European business will be caught dead paying half the salary you get in Colorado to a software engineer (you can get comparable to Colorado as a consultant with maximum "tax hacking" though, still nowhere near the valley). Lastly, at least in my experience, European companies are a lot less meritocratic than US ones (not that I'm seriously claiming there isn't a healthy dose of nepotism/favoritism in the US, but it doesn't tend to be 90%+ of the company, whereas that is very common in the EU).

telchar 9y ago

That's why replacing corporate income tax with personal income tax, which many here advocate, won't work. However that issue can be mitigated by taxing companies on the value of perks

z3t4 9y ago
In Sweden, both the individual and the corp is taxed the value of the perks.
- tobyhinloopen 9y ago
  And in Germany & the Netherlands as well
stevehawk 9y ago
Corporate perks like that are taxed as personal income in the United States.

ci5er 9y ago

Yeah, but that in turn always screwed my US taxes when I lived/worked in Japan (as a native, not an Aoyama expat)

hsljekskfh 9y ago

that sounds a lot better than having more billionaires in the economy. even though everything is very highly priced, they have to justify it at least, and give other kids a chance at their weird scholarship.

adrianN 9y ago

I'm not a tax expert by a long shot, but I believe that here in Germany perks from your company count as taxable income. Company cars definitely do.

adtac 9y ago
What if you just "rent" them indefinitely?
candiodari 9y ago
Germany, like any other European country I know, charges 0% tax as long as a company doesn't pay it out to it's owners. Every other use (see next paragraph) is untaxed. In fact they pay less tax than individuals (no VAT). And of course, high incomes have such companies, that receive their salaries instead of them themselves. This is common and perfectly acceptable, in fact, as a consultant you are taken advantage of if you don't do that. How does it work ? One pays "proper" tax on a nice income they pay themselves indirectly (but 1/3 or less of their real pay) and then invest it in something that's some form of capital replacement business (buy something - rent it out) and grow that business all their career, and of course use it for perks, like free dinners, vacations, health care, education, hotels, cleaning service, ... There's even the more blatant ways to get untaxed pay. For instance renting your own house (you put an office room in your mansion, then "rent" it to your own company for a very nice rent. Untaxed, and legal) For tax purposes, of course, those aren't free dinners. Those are "sales negotiations", which are indeed also conducted in expensive restaurants. "Company conferences", not vacations. As for additional healthcare, that receives special tax treatment by default. Company cars (aside from being a necessity. You're socially judged in Germany by the car you drive. You want "senior consultant" ? Don't arrive in a Renault, or generally any car under $50k. Hell I know people who hack this system by using rentals, removing the stickers and using those to go interview). Anyway company cars are untaxed (0%) as long as their "primary use" is company business. Wanna bet how often that is true for higher pay individuals ? Oh and I've actually walked into the general management building of Deutsche Bank. I guarantee not one of the managers is paying a dime in tax on company perks, and yet ... that building is a palace. You can get free massages there. There's an exquisite restaurant (10 euro per meal). It's the best museum of German art in existence, by a HUGE margin, it's got sleeping rooms (which should be understood to be a free hotel service, because that's what they are), and of course, every business partner or "business partner" ... can be given access, again, for free. And all this service, for free, in the dead center of the city. Hell, the free parking alone is worth 500 euro per month. Can we please stop with the idea that Europe is somehow a more egalitarian place than the US ? It's not. Also no European business will be caught dead paying half the salary you get in Colorado to a software engineer (you can get comparable to Colorado as a consultant with maximum "tax hacking" though, still nowhere near the valley). Lastly, at least in my experience, European companies are a lot less meritocratic than US ones (not that I'm seriously claiming there isn't a healthy dose of nepotism/favoritism in the US, but it doesn't tend to be 90%+ of the company, whereas that is very common in the EU).