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Imagine if a household was only taxed on the money they managed to put away in savings and could count housing expenses, food expenses, education costs, healthc

Imagine if a household was only taxed on the money they managed to put away in savings and could count housing expenses, food expenses, education costs, healthcare, entertainment, vacations, vehicle purchases, etc. 100% against their income.

deleted 1y ago
[deleted]
learn-forever 1y ago
are you agitating to tax companies that lose money?
- cynicalkane 1y ago
  Unironically yes. The reason people want taxes on profits is they think large, powerful companies are a threat... but if you think that, why tax money that large, powerful companies don't waste? The other reason is to tax the rich, but you can do that by simply taxing the rich directly. If we fear powerful companies, we can put some sort of scaling size tax on the largest ones.
  - sieabahlpark 1y ago
    [dead]
  - crazygringo 1y ago
    > Unironically yes. Do you realize that won't produce more revenue, it will just bankrupt companies and produce less revenue? Companies are already incentivized not to waste by competition. That's the whole point of capitalism. You don't need taxes for that.
    - const_cast 1y ago
      A lot of companies are essentially on the welfare of their investors, who may or may not be stupid. Many companies purposefully do not turn a profit, because they're aiming to cheat the market and sell at a loss to push competitors out. A lot of very successful companies operate or have operated this way, and it's incredibly dangerous for the market. It causes the erosion of small businesses and further promotes monopolization. We can try to disincentive that by saying, "hey, you don't want to turn a profit, that's fine, but you still have to pay up". This is part of the reason why if you look around America today it's going to be 99% big corporate players dominating markets and 1% small businesses barely staying afloat.
      - crazygringo 1y ago
        > We can try to disincentive that by saying, "hey, you don't want to turn a profit, that's fine, but you still have to pay up". That doesn't make any sense. You're saying, instead of consumers getting lower prices, they should pay more and that money should go towards taxes. That means, essentially, that you're asking the consumers to pay taxes. What you're describing is predatory pricing. People have mixed views on that, but if you want to address it, then address it directly. Taxing revenue is a strange, roundabout way of doing it that is going to harm a ton of non-predatory businesses without actually changing the market dynamics of predatory pricing -- because your taxes will be affecting the non-predatory companies even more! Since they, by definition, charge more money and therefore will be paying more taxes on the greater revenue.
        const_cast 1y ago
        The problem is that our current tax system incentivizes the kind of venture-capital fueled market manipulation we see. Companies actively try to optimize for the lowest amount of profit, similarly to how the ultra-wealthy try to optimize for the lowest income. We have some methods to address predatory pricing but I think it's obvious they pretty much don't work on any scale that matters. When I look around the modern US, I see the least amount of successful small businesses I've ever seen in my lifetime. We're living in a corporate hellscape, and more and more business look to rent-seeking anti-consumerist behavior.
        crazygringo 1y ago
        > The problem is that our current tax system incentivizes the kind of venture-capital fueled market manipulation we see. It really doesn't at all. It's quite neutral in that regard. > Companies actively try to optimize for the lowest amount of profit This is self-evidently false. Companies actively optimize for the greatest total profit, considering the net present value of future profits. This does mean delaying profits if reinvesting them is expected to yield growth. This is desirable. > We have some methods to address predatory pricing but I think it's obvious they pretty much don't work on any scale that matters. Honestly it hasn't been a major policy priority. They could absolutely work if implemented, but not everyone agrees it's a problem that needs solving. Many people consider it to be hostile to a free market. I'm not taking sides here. > When I look around the modern US, I see the least amount of successful small businesses I've ever seen in my lifetime. The major culprit here is technology and economies of scale. The tax code has some quirks, but it is essentially irrelevant here. Even if predatory pricing accelerates the demise of some small businesses, they weren't going to last much longer anyways. Which is why predatory pricing isn't actually nearly as common as many people think, and why it's not always viewed as a problem. E.g. Uber and Lyft engaged in it for years, but traditional taxis are still in business. Small businesses have been disappearing because they simply don't have economies of scale. Their products cost more so people don't go there. It's that simple. Nothing to do with the tax code.
- viraptor 1y ago
  Yes! That's the VC funded model - money injection while you burn cash and run on losses until you're big enough for a huge return. Which incentivises all sorts of bad behaviours. Same with Hollywood accounting. Just tax a bit less on revenue.
- margalabargala 1y ago
  Why not? We tax people that lose money.
gruez 1y ago
>could count housing expenses, food expenses, education costs, healthcare, entertainment, vacations, vehicle purchases That's what the standard/itemized deduction is supposed to represent. The problem is that we obviously can't let you deduct everything, because if you can deduct everything there would be nothing to tax, aside from savings. And you really don't want to tax savings because savings (also known as "investment") is what makes the modern economy possible.
- energywut 1y ago
  I most certainly cannot deduct housing, food, entertainment, vacations, or large purchases. > The problem is that we obviously can't let you deduct everything, because if you can deduct everything there would be nothing to tax, aside from savings. This is the point the parent poster is making. We say that it's ok for corporations to deduct everything, but not the people? Why are we ok with that?
  - tonyhart7 1y ago
    because they force you to open bussiness
  - gruez 1y ago
    >This is the point the parent poster is making. We say that it's ok for corporations to deduct everything, but not the people? Why are we ok with that? Because companies, to some approximation, are pass-through entities, so it doesn't make sense to tax them. Most of the stuff you buy are for own use/consumption. Food is an obvious one, but so are movie tickets TV and last year's European vacation. Companies don't do any of that. It doesn't need food, movie tickets, or European vacations. It might buy flight tickets for its employees to go on sales trips or whatever, but it's not for the company itself. Moreover if you're buying stuff for business purposes (eg. you're a contractor and need a flight ticket to go meet your client), you can deduct it too. More practically, taxing revenue or not allowing companies to deduct expenses would heavily encourage vertical integration. A vertically integrated widget factory will only have to pay such a tax once, but a widget factory that buys its sheet metal from a foundry, which gets its ores from a miner will have to pay the tax 3 times. That's bad for the economy because it discourages specialization and division of labor, which is basically the other pillar of the modern economy.
mulmen 1y ago
Is this a joke? That’s mostly how it works already.
- vel0city 1y ago
  Most of my health expenses, sure. Not necessarily all of them, unless I play games and live within allowed limits of tax advantaged savings accounts which might just eat my money at the end of the year. My vacations, car payments, food expenses, and housing expenses are absolutely not able to be written off. One part of my housing expenses may be able to be written off, but not anywhere near all of them. Some education expenses, but not nearly all. I get $5k of untaxed income for childcare for the year. How many weeks do you think $5k covers for two kids?
  - mulmen 1y ago
    HSAs carry over from year to year. The only limit is contribution amount. https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits https://www.fidelity.com/learning-center/smart-money/hsa-con...
    - vel0city 1y ago
      FSAs don't. https://www.healthcare.gov/have-job-based-coverage/flexible-spending-accounts/ https://www.healthcare.gov/have-job-based-coverage/flexible-...
      - mulmen 1y ago
        Sure but you do have a tax advantaged way to cover medical expenses.
        vel0city 1y ago
        A way to cover some medical expenses. Not necessarily all. And once again, only if I play games with weird savings accounts rules. If I put money into either of these accounts it's expensive to take out, if possible at all. And with FSAs one needs to essentially guess what their healthcare costs will be and risk losing it at the end of the year if unused.
denkmoon 1y ago
nobody would ever put anything into savings under such a scheme.

deleted 1y ago

[deleted]

learn-forever 1y ago

are you agitating to tax companies that lose money?

cynicalkane 1y ago
Unironically yes. The reason people want taxes on profits is they think large, powerful companies are a threat... but if you think that, why tax money that large, powerful companies don't waste? The other reason is to tax the rich, but you can do that by simply taxing the rich directly. If we fear powerful companies, we can put some sort of scaling size tax on the largest ones.
- sieabahlpark 1y ago
  [dead]
- crazygringo 1y ago
  > Unironically yes. Do you realize that won't produce more revenue, it will just bankrupt companies and produce less revenue? Companies are already incentivized not to waste by competition. That's the whole point of capitalism. You don't need taxes for that.
  - const_cast 1y ago
    A lot of companies are essentially on the welfare of their investors, who may or may not be stupid. Many companies purposefully do not turn a profit, because they're aiming to cheat the market and sell at a loss to push competitors out. A lot of very successful companies operate or have operated this way, and it's incredibly dangerous for the market. It causes the erosion of small businesses and further promotes monopolization. We can try to disincentive that by saying, "hey, you don't want to turn a profit, that's fine, but you still have to pay up". This is part of the reason why if you look around America today it's going to be 99% big corporate players dominating markets and 1% small businesses barely staying afloat.
    - crazygringo 1y ago
      > We can try to disincentive that by saying, "hey, you don't want to turn a profit, that's fine, but you still have to pay up". That doesn't make any sense. You're saying, instead of consumers getting lower prices, they should pay more and that money should go towards taxes. That means, essentially, that you're asking the consumers to pay taxes. What you're describing is predatory pricing. People have mixed views on that, but if you want to address it, then address it directly. Taxing revenue is a strange, roundabout way of doing it that is going to harm a ton of non-predatory businesses without actually changing the market dynamics of predatory pricing -- because your taxes will be affecting the non-predatory companies even more! Since they, by definition, charge more money and therefore will be paying more taxes on the greater revenue.
      - const_cast 1y ago
        The problem is that our current tax system incentivizes the kind of venture-capital fueled market manipulation we see. Companies actively try to optimize for the lowest amount of profit, similarly to how the ultra-wealthy try to optimize for the lowest income. We have some methods to address predatory pricing but I think it's obvious they pretty much don't work on any scale that matters. When I look around the modern US, I see the least amount of successful small businesses I've ever seen in my lifetime. We're living in a corporate hellscape, and more and more business look to rent-seeking anti-consumerist behavior.
        crazygringo 1y ago
        > The problem is that our current tax system incentivizes the kind of venture-capital fueled market manipulation we see. It really doesn't at all. It's quite neutral in that regard. > Companies actively try to optimize for the lowest amount of profit This is self-evidently false. Companies actively optimize for the greatest total profit, considering the net present value of future profits. This does mean delaying profits if reinvesting them is expected to yield growth. This is desirable. > We have some methods to address predatory pricing but I think it's obvious they pretty much don't work on any scale that matters. Honestly it hasn't been a major policy priority. They could absolutely work if implemented, but not everyone agrees it's a problem that needs solving. Many people consider it to be hostile to a free market. I'm not taking sides here. > When I look around the modern US, I see the least amount of successful small businesses I've ever seen in my lifetime. The major culprit here is technology and economies of scale. The tax code has some quirks, but it is essentially irrelevant here. Even if predatory pricing accelerates the demise of some small businesses, they weren't going to last much longer anyways. Which is why predatory pricing isn't actually nearly as common as many people think, and why it's not always viewed as a problem. E.g. Uber and Lyft engaged in it for years, but traditional taxis are still in business. Small businesses have been disappearing because they simply don't have economies of scale. Their products cost more so people don't go there. It's that simple. Nothing to do with the tax code.
viraptor 1y ago
Yes! That's the VC funded model - money injection while you burn cash and run on losses until you're big enough for a huge return. Which incentivises all sorts of bad behaviours. Same with Hollywood accounting. Just tax a bit less on revenue.
margalabargala 1y ago
Why not? We tax people that lose money.

gruez 1y ago

>could count housing expenses, food expenses, education costs, healthcare, entertainment, vacations, vehicle purchases That's what the standard/itemized deduction is supposed to represent. The problem is that we obviously can't let you deduct everything, because if you can deduct everything there would be nothing to tax, aside from savings. And you really don't want to tax savings because savings (also known as "investment") is what makes the modern economy possible.

energywut 1y ago
I most certainly cannot deduct housing, food, entertainment, vacations, or large purchases. > The problem is that we obviously can't let you deduct everything, because if you can deduct everything there would be nothing to tax, aside from savings. This is the point the parent poster is making. We say that it's ok for corporations to deduct everything, but not the people? Why are we ok with that?
- tonyhart7 1y ago
  because they force you to open bussiness
- gruez 1y ago
  >This is the point the parent poster is making. We say that it's ok for corporations to deduct everything, but not the people? Why are we ok with that? Because companies, to some approximation, are pass-through entities, so it doesn't make sense to tax them. Most of the stuff you buy are for own use/consumption. Food is an obvious one, but so are movie tickets TV and last year's European vacation. Companies don't do any of that. It doesn't need food, movie tickets, or European vacations. It might buy flight tickets for its employees to go on sales trips or whatever, but it's not for the company itself. Moreover if you're buying stuff for business purposes (eg. you're a contractor and need a flight ticket to go meet your client), you can deduct it too. More practically, taxing revenue or not allowing companies to deduct expenses would heavily encourage vertical integration. A vertically integrated widget factory will only have to pay such a tax once, but a widget factory that buys its sheet metal from a foundry, which gets its ores from a miner will have to pay the tax 3 times. That's bad for the economy because it discourages specialization and division of labor, which is basically the other pillar of the modern economy.

mulmen 1y ago

Is this a joke? That’s mostly how it works already.

vel0city 1y ago
Most of my health expenses, sure. Not necessarily all of them, unless I play games and live within allowed limits of tax advantaged savings accounts which might just eat my money at the end of the year. My vacations, car payments, food expenses, and housing expenses are absolutely not able to be written off. One part of my housing expenses may be able to be written off, but not anywhere near all of them. Some education expenses, but not nearly all. I get $5k of untaxed income for childcare for the year. How many weeks do you think $5k covers for two kids?
- mulmen 1y ago
  HSAs carry over from year to year. The only limit is contribution amount. https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits https://www.fidelity.com/learning-center/smart-money/hsa-con...
  - vel0city 1y ago
    FSAs don't. https://www.healthcare.gov/have-job-based-coverage/flexible-spending-accounts/ https://www.healthcare.gov/have-job-based-coverage/flexible-...
    - mulmen 1y ago
      Sure but you do have a tax advantaged way to cover medical expenses.
      - vel0city 1y ago
        A way to cover some medical expenses. Not necessarily all. And once again, only if I play games with weird savings accounts rules. If I put money into either of these accounts it's expensive to take out, if possible at all. And with FSAs one needs to essentially guess what their healthcare costs will be and risk losing it at the end of the year if unused.

denkmoon 1y ago

nobody would ever put anything into savings under such a scheme.