3 ms·

There's nothing in the Constitution that says the government has to use a cash basis for levying taxes. Sixteenth Amendment: "The Congress shall have power to

There's nothing in the Constitution that says the government has to use a cash basis for levying taxes. Sixteenth Amendment: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

Turing_Machine 3y ago
The point is that it's not "income" until you actually receive it. Money you've borrowed is not "income". It is a liability, whether or not you've used another asset as collateral. Property you own outright is not "income", either.
- HDThoreaun 3y ago
  Where does the amendment define income?
  - Turing_Machine 3y ago
    It doesn't. Words have meanings, and a loan is not "income".
    - HDThoreaun 3y ago
      fully collateralized loans sure seem like income to me.
      - Turing_Machine 3y ago
        Do you think that (e.g.) student loans should be counted as "income", given that they have much in common with a fully-collateralized loan? (the collateral in this case is all of the borrower's future income, given that student loans cannot be discharged in bankruptcy).
        HDThoreaun 3y ago
        It can get tricky quickly. Imo there are two solutions here. First option is to count it as income that then gets written off as a business expense. Second is to flesh out what fully collateralized means to better express it as an alternative to selling something. I think the first option makes sense. There are many scenarios where businesses will take fully collateralized loans and then reinvest the proceeds, that shouldn't be taxed. But if the loans are just turned into profit they should be.
        Turing_Machine 3y ago
        > But if the loans are just turned into profit they should be. What if the student loans are turned into beer? Should they then be considered "income"? If you think this sounds facetious, you've never been on a college campus the day the student loan checks hit the banks.

Turing_Machine 3y ago

The point is that it's not "income" until you actually receive it. Money you've borrowed is not "income". It is a liability, whether or not you've used another asset as collateral. Property you own outright is not "income", either.

HDThoreaun 3y ago
Where does the amendment define income?
- Turing_Machine 3y ago
  It doesn't. Words have meanings, and a loan is not "income".
  - HDThoreaun 3y ago
    fully collateralized loans sure seem like income to me.
    - Turing_Machine 3y ago
      Do you think that (e.g.) student loans should be counted as "income", given that they have much in common with a fully-collateralized loan? (the collateral in this case is all of the borrower's future income, given that student loans cannot be discharged in bankruptcy).
      - HDThoreaun 3y ago
        It can get tricky quickly. Imo there are two solutions here. First option is to count it as income that then gets written off as a business expense. Second is to flesh out what fully collateralized means to better express it as an alternative to selling something. I think the first option makes sense. There are many scenarios where businesses will take fully collateralized loans and then reinvest the proceeds, that shouldn't be taxed. But if the loans are just turned into profit they should be.
        Turing_Machine 3y ago
        > But if the loans are just turned into profit they should be. What if the student loans are turned into beer? Should they then be considered "income"? If you think this sounds facetious, you've never been on a college campus the day the student loan checks hit the banks.