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>It would be foolish not to. Hard disagree. At typical self-employed scale, fiddling around with avoiding taxes is a waste of time (and money) which is a net

>It would be foolish not to. Hard disagree. At typical self-employed scale, fiddling around with avoiding taxes is a waste of time (and money) which is a net loser against putting that energy into finding income. Are self-employed people really busy setting up as a business in Estonia or lobbying their national representatives? If you're taxed on your profits, it's always better to double your profits than to avoid tax on your current profits. This tax avoidance strategy only becomes important where there are no other efficiencies remaining to find: or, when you don't have other competitors to worry about. It's a monopolist strategy. A tax reform that benefits you is also going to benefit your competitors - so it's not being done for competitive reasons.

graeme 6y ago
You’re arguing against a straw man. OP wasn’t saying the self employed incorporate in Estonia. They said they are efficient with taxes. They even gave a specific example: business expenses. For example, I run a business in Canada, and know that food and drinks are only 50% deductible. Therefore, at a 50% marginal tax rate those items effectively cost business 50% more than, say, buying office supplies. And that informs decision making. It’s also vital to know how different capital cost classes and depreciation schedules affect things, or to properly set up a home office deduction , and to deduct everything deductible. Most of these things are set it and forget it. It’s absolutely worth doing correctly even at a self employed scale.
- throwaway2245 6y ago
  Legitimately expensing office supplies is scarcely considered "corporate tax avoidance" and not reasonable to call "stealing". Since the OP was making this direct comparison, and you seem to like fallacies, you can take it that I am calling their argument a slippery slope fallacy.
  - jlokier 6y ago
    I am the OP and I was not making this direct comparison. I was pointing out that it's common for the small business to perform tax efficiency, which is extremely widespread and taught in small business courses. Most people running a small business or self-employed relate to it, and it's indeed a "set and forget" thing, mainly because you just do what the accountant tells you. In that world, tax efficiency is largely seen as the right thing to do and sensible ("good"). And when you scale that up, the end result looks like international corporate tax avoidance ("bad"). That's not at all the same as saying the small business version is tax avoidance of the "bad" kind. It's saying that one thing follows from another, not that they are the same thing. And so we can't solve international corporate tax avoidance by a simple expedient of trying to "ban" or "shame" it, because there isn't any clear boundary at which sensible, approved, "good" tax efficiency turns into shameworthy "bad" avoidance. And so, to solve it, we need to use a different method, and I advocated such a method.
    - throwaway2245 6y ago
      > It's saying that one thing follows from another That's why I called it a slippery slope fallacy. Following the common tax rules to run a competitive and productive business does not inevitably lead to calculating and exploiting (and lobbying to create) loopholes in international tax law.
jlokier 6y ago
>> It would be foolish not to. > Hard disagree. At typical self-employed scale, fiddling around with avoiding taxes is a waste of time (and money) To the nearest percentage approximation, 100% of self-employed and small businesses do exactly this at a basic level, and it's low effort. There's an entire support industry to keep it simple. Tax efficiency, which is the polite name for avoiding taxes, which is perfectly legal and encouraged, is literally taught as one of the first things in small business courses, somewhere after book-keeping and giving the books to your accountant. It means you ask your accountant what expenses to write down, they tell you, then later they look at your books and say "did you know if you do these other little things like this, altogether you can save another thousand?" and you go, wow, I didn't think of those, I guess you are worth the fee after all. Roughly 100% of self-employed and small businesses do this, in any place where it's common to use an accountant.
- ryandrake 6y ago
  Not only self employed and small businesses! If you work as an employee and have a 401(k), you are participating in a form of tax avoidance: deferral. Your money goes into it, but it's not taxed until much later when you retire and take it out. If you have an HSA, a Roth IRA or a 529 plan for your kid's education, you're also deferring and/or avoiding taxes. If you buy municipal bonds you're avoiding some taxes. There are a few "it would be foolish not to" ways for middle class people to keep their finances tax efficient. Obviously there are many more ways available to rich people and businesses, and they can shelter orders of magnitude more money than us, but let's not pretend that tax avoidance is something only they do.

graeme 6y ago

You’re arguing against a straw man. OP wasn’t saying the self employed incorporate in Estonia. They said they are efficient with taxes. They even gave a specific example: business expenses. For example, I run a business in Canada, and know that food and drinks are only 50% deductible. Therefore, at a 50% marginal tax rate those items effectively cost business 50% more than, say, buying office supplies. And that informs decision making. It’s also vital to know how different capital cost classes and depreciation schedules affect things, or to properly set up a home office deduction , and to deduct everything deductible. Most of these things are set it and forget it. It’s absolutely worth doing correctly even at a self employed scale.

throwaway2245 6y ago
Legitimately expensing office supplies is scarcely considered "corporate tax avoidance" and not reasonable to call "stealing". Since the OP was making this direct comparison, and you seem to like fallacies, you can take it that I am calling their argument a slippery slope fallacy.
- jlokier 6y ago
  I am the OP and I was not making this direct comparison. I was pointing out that it's common for the small business to perform tax efficiency, which is extremely widespread and taught in small business courses. Most people running a small business or self-employed relate to it, and it's indeed a "set and forget" thing, mainly because you just do what the accountant tells you. In that world, tax efficiency is largely seen as the right thing to do and sensible ("good"). And when you scale that up, the end result looks like international corporate tax avoidance ("bad"). That's not at all the same as saying the small business version is tax avoidance of the "bad" kind. It's saying that one thing follows from another, not that they are the same thing. And so we can't solve international corporate tax avoidance by a simple expedient of trying to "ban" or "shame" it, because there isn't any clear boundary at which sensible, approved, "good" tax efficiency turns into shameworthy "bad" avoidance. And so, to solve it, we need to use a different method, and I advocated such a method.
  - throwaway2245 6y ago
    > It's saying that one thing follows from another That's why I called it a slippery slope fallacy. Following the common tax rules to run a competitive and productive business does not inevitably lead to calculating and exploiting (and lobbying to create) loopholes in international tax law.

jlokier 6y ago

>> It would be foolish not to. > Hard disagree. At typical self-employed scale, fiddling around with avoiding taxes is a waste of time (and money) To the nearest percentage approximation, 100% of self-employed and small businesses do exactly this at a basic level, and it's low effort. There's an entire support industry to keep it simple. Tax efficiency, which is the polite name for avoiding taxes, which is perfectly legal and encouraged, is literally taught as one of the first things in small business courses, somewhere after book-keeping and giving the books to your accountant. It means you ask your accountant what expenses to write down, they tell you, then later they look at your books and say "did you know if you do these other little things like this, altogether you can save another thousand?" and you go, wow, I didn't think of those, I guess you are worth the fee after all. Roughly 100% of self-employed and small businesses do this, in any place where it's common to use an accountant.

ryandrake 6y ago
Not only self employed and small businesses! If you work as an employee and have a 401(k), you are participating in a form of tax avoidance: deferral. Your money goes into it, but it's not taxed until much later when you retire and take it out. If you have an HSA, a Roth IRA or a 529 plan for your kid's education, you're also deferring and/or avoiding taxes. If you buy municipal bonds you're avoiding some taxes. There are a few "it would be foolish not to" ways for middle class people to keep their finances tax efficient. Obviously there are many more ways available to rich people and businesses, and they can shelter orders of magnitude more money than us, but let's not pretend that tax avoidance is something only they do.