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This article is such a cheap and generic anti-corporate jab (Tesla not being unique here at all). Don't get me wrong, I too disagree that expenses can only be w

by zo1 2y ago

This article is such a cheap and generic anti-corporate jab (Tesla not being unique here at all). Don't get me wrong, I too disagree that expenses can only be written off by corporate entities, but that is just the way it is. I'm sure if we really unpacked the numbers, we'd see that all of Tesla's employees' salaries that were exempted from Tesla's "taxable income" meant plenty of income taxes being paid over to the government for social welfare and other spending. No one wants to go down that rabbit hole, because we'd then have to have an honest discussion about why I, as a human, don't get to deduct most of my personal expenses and only pay tax on my "saved" or "non-spent' income. At that point, we'd be getting almost 0 tax income because most people spend a huge chunk of their income on necessary survival and arguably in the "cost" of being an employee.

michaelt 2y ago
This is one of those places where a sensible theory leads to a bunch of loopholes in practice. If we applied a 20% income tax to corporate entities, then buying a car through a dealership would cost 20% more than buying direct from the factory. You can imagine what that would do to intermediary-heavy transactions, like when I give pension money to a fund marketplace who buy a fund who go to a stockbroker and buy shares; I'd end up paying 20% tax four times in a row. Of course the problem with letting companies deduct expenses is they can deduct sham expenses to move expenses between tax regimes. Sell your brand name to a company in a tax haven, pay a per-product 'license fee' for the right to use the name, and suddenly you're making zero profit in the place you do all your operations, as all the profit is, on paper, being made in the tax haven.
- JumpCrisscross 2y ago
  > If we applied a 20% income tax to corporate entities, then buying a car through a dealership would cost 20% more than buying direct from the factory You'd also have to add a massive border-adjustment tax, because otherwise I wouldn't buy it from the dealership or the factory, but buy it in Mexico--where producers don't have to pay the tax--and then drive it home. Not super applicable for a car, I know, but it's a general problem with taxing legal fictions.

by zo1 2y ago

michaelt 2y ago

This is one of those places where a sensible theory leads to a bunch of loopholes in practice. If we applied a 20% income tax to corporate entities, then buying a car through a dealership would cost 20% more than buying direct from the factory. You can imagine what that would do to intermediary-heavy transactions, like when I give pension money to a fund marketplace who buy a fund who go to a stockbroker and buy shares; I'd end up paying 20% tax four times in a row. Of course the problem with letting companies deduct expenses is they can deduct sham expenses to move expenses between tax regimes. Sell your brand name to a company in a tax haven, pay a per-product 'license fee' for the right to use the name, and suddenly you're making zero profit in the place you do all your operations, as all the profit is, on paper, being made in the tax haven.

JumpCrisscross 2y ago
> If we applied a 20% income tax to corporate entities, then buying a car through a dealership would cost 20% more than buying direct from the factory You'd also have to add a massive border-adjustment tax, because otherwise I wouldn't buy it from the dealership or the factory, but buy it in Mexico--where producers don't have to pay the tax--and then drive it home. Not super applicable for a car, I know, but it's a general problem with taxing legal fictions.