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Originally Posted by Ishniknork
Hi Asawadude,
What I'm thinking is to tax all of this the same. No expense breaks, or any other breaks or deductions, for business, corporations, or individuals. That would automatically get rid of the "Adjusted Gross Income" thing. All that crap is what has made the system so fraking complicated in the first place!
Whether the tax is applied to a business, a corporation, or an individual, they each have a net income/profit. TAX THAT. Equally. Like this:
John Doe made $100,000 last year, He pays XX% tax on that.
ABC corporation made $100,000,000 profit last year, the corporation pays the same XX% tax on that just like a person.
What's so difficult about that? All that needs to be done is calculate the percentage needed to maintain the current tax revenue.
Of course a business or corporation has no need for Social Security so that would only be applied to individuals for the present. With the implementation of mandatory enrollment into an individual retirement plan Social Security will eventually not be needed.
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What you propose will result in some people having to pay more in taxes than they earn.
I'll use as an example a professional boxer:
A well-known boxer makes $10 million for a championship fight. That is what his paycheck is for: $10 million.
He then is required by contract to pay $3 million to his manager, $1.5 million to his trainer, $750k to the assistant trainer, and another $500k to his supporting staff who helped him during the 8 weeks of training and preperation. He has to pay $100k for renting the training facilities for 8 weeks, $300k for his entire staff to have room and board during the training, $50k for travel and hotel expenses for his entire staff, etc.
Let's suppose that by the time he is done paying out all his expenses, he is left with $3 million. Yet, according to the tax law, he is required to pay 35% of his income in taxes. His "adjusted gross income" is $3 million. If you require him to pay taxes on $10 million, he will end up having to pay more than he earns.
While most people do not encounter such high expenses, there are quite a few professions that work like this. The IRS allows you to work as an "independent contractor" which means you can deduct all your expenses and only pay taxes on your "adjusted gross income". Without this, many professions could not exist.