You cannot make it easy for people and corporations to be interchangeable and then have differing tax rates for each. They MUST have the SAME rate.
eg. I 'own' all my rental properties through LLCs which are themselves 'owned' by a corporation of which I am the sole benefactor. Travel? expensed. Living in my house for free? No problem, house owned by LLC, rent waived by my own corporation. Any living expense whatsoever? No problem, benefits of running/owning the corporation. What then is the point of being an individual on your tax return? Oh yes, I pay my fair share on my income of $1 per year.
Honestly, sometimes I think people like you who bring up these arguments are completely uneducated.
The top marginal tax rate and corporate tax rate should be equalised.
That way there is no tax benefit to putting revenue through corporations or individually.
Yes, the tax offices can catch abuses like this, but it would be much simpler if there was no tax advantage to doing it one way or the other.
The amount of tax accountants and lawyers that do no productive work because they are moving stuff around in entities makes me want to cry. It's a giant churning game that does nobody any good. The govt doesn't get the money, because they can always be outsmarted. The armies of people doing the outsmarting don't contribute to society.
Just equalise the top tax rates for individual and corporations and loopholes disappear by the bucket load.
And, of course, throwing people in jail who deliberately fail to report such benefits.
1. The IRS already does this with certain classes of businesses in which they make it illegal to form them purely for tax avoidance purposes.
2.You set the corporate income tax to 0, but personal income tax to whatever. You then make all corporate profits flow through to individuals, and make corporate write offs and deductions rare/impossible/non-existant.
Under our current tax environment, you're right. But there is nothing inherent in reality that makes this impossible.
