4 ms·

Why businesses are taxed so low but individuals/employees so high in EU (35%-65% income tax)?

• djbebs 4y ago
  Because businesses are owned by people who in turn are taxed. In effect any corporation tax is a double tax.
  • mywittyname 4y ago
    > In effect any corporation tax is a double tax. There are a whole host of corporate entities which allow for pass-through taxation: LLC, S-Corp, sole proprietorships, and the like. I'd be surprised if European countries didn't have similar mechanisms.
    • troad 4y ago
      Believe it or not, they mostly don’t. It tends to be fairly binary. Corporations have legal personality, including separate tax identity, so no pass-through taxation. Sole proprietorships have pass-through taxation, but no legal personality (incl. no limit to liability). Intermediate entities like LLCs are a relatively recent Americanism that’s unusual in the rest of the world.
    • kwere 4y ago
      sole proprietorships are taxed at personal income level but pay pension contributions and/others at a % level, the game became unwhorthy at six figures levels. the way out are paying the lifestyle like SUVs with company funds (deductibles) and if worthy setting paper boxes to pay lower taxes. Example: San Marino offeres Trust funds that are easily taxed at 1.7% on income (can take money out after 2 accounting years). quite handy to build family/long term wealth
  • josefx 4y ago
    Double the tax for double the legally distinct entities.
  • zuminator 4y ago
    That's how taxes work generally though. I already paid income taxes on my salary, but when I spend it on something I have to pay taxes again, and then the retailer has to count it as taxable income as well. Anytime money changes hands the government gets its vig. I don't see how the corporate tax is so egregiously different.
    • diego_sandoval 4y ago
      > Anytime money changes hands the government gets its vig. And doesn't that create an artificial pressure for money to change hands fewer times (for example, in the production of a consumer good)?
      • exceptione 4y ago
        No, if we are talking about VAT then companies have to make the following sum €800 VAT the company charged to clients €500 VAT the company paid to suppliers ===== - €300 VAT the company has to pay to authorities This system makes sure that VAT over any good will only be charged once. VAT usually rolls over from one company to the next till it reaches its destination, the consumer. ULTIMATELY, the consumer pays the VAT. The consumer cannot deduct VAT.
      • UncleEntity 4y ago
        I doubt anyone makes this mental calculation when they’re considering buying something at a store. Sure, big ticket items people might shop around for a lower tax but will they not buy something based on minimizing the amount they pay to the government?
    • NoboruWataya 4y ago
      No one is saying it's egregiously different. The question was why corporate taxes are lower than personal income taxes, the answer is that there is no logical reason why they should be equal or higher. No one complains that their sales tax rate is lower than their income tax rate.
• dantheman 4y ago
  Ideally both should not be taxed.
  • tmtvl 4y ago
    Then where do we get the money to pay for things like the justice system, law enforcement, national infrastructure, unemployment benefits, healthcare, pensions, customs, diplomats,...? Switch to a system where the government owns everything and gives people what they need if they work properly?
    • mywittyname 4y ago
      Inflationary/deficit spending. The MMT argument for taxation is that it's necessary to encourage demand for a currency, thus making it more valuable. But there's no fundamental reason that a government which controls its own currency must collect taxes to pay for various services. Congress could pay state and local governments directly each year. If you're willing to throw away some property rights, then state and local governments could theoretically lease land as a means of raising revenue without direct taxation. (this is a terrible idea)
      • ClumsyPilot 4y ago
        > If you're willing to throw away some property rights, then state and local governments could theoretically lease land as a means of raising revenue without direct taxation. (this is a terrible idea) Why is it a terrible idea?
      • cjbgkagh 4y ago
        My favorite MMT detail is the currency lock up accounts to reduce inflation. Basically they prevent people from spending money until inflation decreases. They claim it's not confiscatory as people will get their money back eventually and not taxation because it's the same amount of money. Despite their claims it is indeed both of those things as the real value of the money has decreased.
      • rogers18445 4y ago