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For most people, business expenses are paid by the employer and profit==income, but for some (the self-employed in particular) their business expenses come out
by lotharbot 12y ago
For most people, business expenses are paid by the employer and profit==income, but for some (the self-employed in particular) their business expenses come out of pocket and are deductible. Individuals actually end up paying taxes on profit, we're just used to wording it as income.
- seanflyon 12y agoAnything a corporation spends money on is an expense and is deducted from profit. Most things people spend money on (housing, food, car...) are generally not deductible. If people were taxed like corporations we would only be taxed on the increase in our savings accounts. Median american savings is $0 so most people would not pay any taxes if they were taxed like corporations.
- lotharbot 12y agoanything business-related a corporation spends money on is an expense. Anything business-related an individual spends money on is an expense. Anything not-business-related a corporation spends money on is considered to be a misuse of funds (or fraud). People are already taxed in similar ways to corporations.
- seanflyon 12y agoWhen a company spends money to continue its existence, such as rent, it is deducted from its taxable profit. When a person spends money to continue their existence, such as rent, it is not deducted from their taxable income. If people were taxed as corporations the median American would pay no taxes.