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Tax loopholes (and tax lawyers) exist only because there is sufficient complexity in the tax system/tax code. This is because the tax system actually has 2 con

by rapht 6y ago

Tax loopholes (and tax lawyers) exist only because there is sufficient complexity in the tax system/tax code. This is because the tax system actually has 2 conflicting uses: (i) collect revenue for the gov't and (ii) create incentives/disincentives that are meant to push taxpayers in ways that are deemed beneficial, be it to the economy or to certain policy like environment, housing, etc. If you drop (ii) you can end up with an extremely simple tax code as most of the tax code complexities deal with those incentives/disincentives. So the question is: to what extent can you do away with (ii), or more generally with tax code complexity?

srtjstjsj 6y ago
No, the tax system is complex because businesses are synthetic entities that can be arbitrarily complex. This is because corporations are allowed to exist unchecked since the 19th century. Return to the original intention of corporations, that they must be chartered and regulated in order to preserve their exemption from human individual law, and most of the problem goes away.
- WJW 6y ago
  That is a very charitable interpretation of the original intention of corporations. For all intents and purposes, the earliest corporations were the shipping companies in Holland and England of the 16- and 1700s that were made to distribute the risk of colonial trading operations. Chartering and regulation came much later, when the various governmental structures of the time recognized the vast profits that were being made and decided to use their standing armies to get some of that money for themselves. The earliest corporate law is only from ~1798, almost 2 centuries after the founding of the VOC. The original intention of corporations was to make more money for their owners and that is pretty much still the case. Chartering and regulation were introduced later, to curb the worst excesses of human greed. Arguably, this very discussion thread and the push by governments to curtail tax evasion is proof of that ongoing process.
cywick 6y ago
> Tax loopholes (and tax lawyers) exist only because there is sufficient complexity in the tax system/tax code. I don't think this is entirely correct. Even if there were no deductions and no other complexities, and the corporate income tax was simply based on "all revenue minus all costs", a company could still reduce or even eliminate its tax burden entirely by simply paying IP licensing costs to a different company located in a tax haven.
- stjohnswarts 6y ago
  Tax any money going to these havens at a similar rate, don't allow it to be a tax deduction if the money is leaving the country.

by rapht 6y ago

srtjstjsj 6y ago

No, the tax system is complex because businesses are synthetic entities that can be arbitrarily complex. This is because corporations are allowed to exist unchecked since the 19th century. Return to the original intention of corporations, that they must be chartered and regulated in order to preserve their exemption from human individual law, and most of the problem goes away.

WJW 6y ago
That is a very charitable interpretation of the original intention of corporations. For all intents and purposes, the earliest corporations were the shipping companies in Holland and England of the 16- and 1700s that were made to distribute the risk of colonial trading operations. Chartering and regulation came much later, when the various governmental structures of the time recognized the vast profits that were being made and decided to use their standing armies to get some of that money for themselves. The earliest corporate law is only from ~1798, almost 2 centuries after the founding of the VOC. The original intention of corporations was to make more money for their owners and that is pretty much still the case. Chartering and regulation were introduced later, to curb the worst excesses of human greed. Arguably, this very discussion thread and the push by governments to curtail tax evasion is proof of that ongoing process.

cywick 6y ago

> Tax loopholes (and tax lawyers) exist only because there is sufficient complexity in the tax system/tax code. I don't think this is entirely correct. Even if there were no deductions and no other complexities, and the corporate income tax was simply based on "all revenue minus all costs", a company could still reduce or even eliminate its tax burden entirely by simply paying IP licensing costs to a different company located in a tax haven.

stjohnswarts 6y ago
Tax any money going to these havens at a similar rate, don't allow it to be a tax deduction if the money is leaving the country.