Flat Tax - please to esplain?

[alfred russel]

They're also trying to equalise tax on capital and on corporate income to remove economic distortions.  The theory is that if Buffet's paying the same rate whether he has his income as employment, corporate or capital income he won't be worrying about the respective tax schemes but will put it where it's most likely to benefit him and be economically effective.  So, basically, there's no tax encouragements by the state that distort investments.

Well no. A corporation is owned by people, so if you tax corporate earnings and then tax personal earnings again, you have created a disincentive to create a corporate business structure, and an incentive to remove wealth from the corporate form. Western countries typically have structures that large businesses with multiple investors can operate as so that they avoid corporate taxation.

Buffet's company is a corporation that pays corporate tax, but many investment companies are privately held and in forms that do not. So if you tax Buffet's corporation at 35%, and then add a personal tax rate on Buffett of an additional 35% (or so), what a great incentive for parts of his business to be sold or transferred to partnerships where the owners only pay personal taxes.

[alfred russel]

You have to also remember that "simplifying the tax code" is not as easy if you want to keep competitive for foreign (or local) investors. It makes sense to keep corporate income tax low (or eliminate it in certain transactions/set-ups) as otherwise a number of corporate entities you have in your group structure would affect the amount of tax you pay - which would make no sense.

But this means that the same system can be used by the rich to avoid paying the same level of taxes as everybody else.

I think most people think about personal income taxes when talking about simplifying the tax code.
Designing corporate taxes in a way that money that is taken out of the company as personal income is considered just that and taxed accordingly should be feasible, no?

Not really. There is a host of reasons/things at work here.

You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.

Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!

Capital gains tax is the same for everyone and can be used to circumvent personal income tax.

You could source your income through a Cypriot or a Jersey structure and pay hardly any taxes.

Etc.

Etc.

I hope you don't moonlight as a US tax advisor, or you and your clients are likely to end up in the big house.

[DGuller]

Not really. There is a host of reasons/things at work here.

You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.

Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!

Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct.  AFAIK, you can't use corporate assets for personal use, in any guise.

[HVC]

Not really. There is a host of reasons/things at work here.

You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.

Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!

Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct.  AFAIK, you can't use corporate assets for personal use, in any guise.

in any case (at least in canada) when an employee uses company property like cars or condo's they're taxed on the value of the use.

[crazy canuck]

Not really. There is a host of reasons/things at work here.

You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.

Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!

Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct.  AFAIK, you can't use corporate assets for personal use, in any guise.

Yet again Marti gives us pause to take his claim to be a lawyer seriously.

I wish my personal law corporation could just buy everything I need in my personal life.  But who knows maybe that is the way things work in Poland.

[Ideologue]

Not really. There is a host of reasons/things at work here.

You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.

Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!

Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct.  AFAIK, you can't use corporate assets for personal use, in any guise.

Yet again Marti gives us pause to take his claim to be a lawyer seriously.

I wish my personal law corporation could just buy everything I need in my personal life.  But who knows maybe that is the way things work in Poland.

Cocaine is a business expense.

[Razgovory]

Yet again Marti gives us pause to take his claim to be a lawyer seriously.

I wish my personal law corporation could just buy everything I need in my personal life.  But who knows maybe that is the way things work in Poland.

I seem to recall Marty mentioning he did something with Maritime law, so everything he says about law may be true, but only at sea.  Then again, he might simply be a Sea Lawyer, which isn't really a type of lawyer. http://www.merriam-webster.com/dictionary/sea%20lawyer and thus our confusion.

[alfred russel]

Not really. There is a host of reasons/things at work here.

You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.

Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!

Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct.  AFAIK, you can't use corporate assets for personal use, in any guise.

I'm not a lawyer in any country, but know that in the US if you comingle personal and corporate assets you are just asking for the liability protections of the corporations to be disregarded, and that if you try to deduct personal expenses through a corporation you will end up in big trouble with the IRS if you get caught. So when Marty says "noone can do shit", noone is excluding the judicial system, the IRS, and law enforcement. But beyond those groups, I think Marty is basically correct. For example, a baker can't do anything about tax evasion or fraud without them.

Also, in the US (and I'm guessing this might be different in Poland), if you are a contractor to a company you will pay at a personal tax rate in almost every circumstance.

[Ed Anger]

Cal wants a flat chest tax.

[Caliga]

Cal wants a flat chest tax.

I'd use the revenues raised to pay for mandated implants.  That way I would eventually remove the need for the tax.  Government works after all!

[Ed Anger]

Cal wants a flat chest tax.

I'd use the revenues raised to pay for mandated implants.  That way I would eventually remove the need for the tax.  Government works after all!

Never eliminate your revenue streams. 

[DGuller]

I used to think that grumbler pretending that Marty isn't a lawyer was a tired schtick.  Now I think that Marty pretending to be a lawyer is the truly tired schtick.

[Razgovory]

I used to think that grumbler pretending that Marty isn't a lawyer was a tired schtick.  Now I think that Marty pretending to be a lawyer is the truly tired schtick.

People question Marty's claim of being a lawyer not because it's a schtick, but because he consistently demonstrates both an abysmal knowledge of laws and the principles they are based on.  It's kind of disturbing actually.  If he's telling the truth, then he is what passes for the "educated class" in Poland.  I shudder to think what the rest of the country may be like.  I imagine a country where people hear thunder, look up at the sky, and drown when rain trickles down their noses or slack jawed mouths.

[Martinus]

You have to also remember that "simplifying the tax code" is not as easy if you want to keep competitive for foreign (or local) investors. It makes sense to keep corporate income tax low (or eliminate it in certain transactions/set-ups) as otherwise a number of corporate entities you have in your group structure would affect the amount of tax you pay - which would make no sense.

But this means that the same system can be used by the rich to avoid paying the same level of taxes as everybody else.

I think most people think about personal income taxes when talking about simplifying the tax code.
Designing corporate taxes in a way that money that is taken out of the company as personal income is considered just that and taxed accordingly should be feasible, no?

Not really. There is a host of reasons/things at work here.

You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.

Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!

Capital gains tax is the same for everyone and can be used to circumvent personal income tax.

You could source your income through a Cypriot or a Jersey structure and pay hardly any taxes.

Etc.

Etc.

I hope you don't moonlight as a US tax advisor, or you and your clients are likely to end up in the big house.

I am a Pole responding to a German. Why the fuck would you think my post has anything to do with US tax laws???

[Martinus]

Not really. There is a host of reasons/things at work here.

You could spend company money of your 100% owned company for personal stuff (e.g. companies can buy houses, cars, food etc.) and noone can do a shit.

Self-employed people need to be as competitive as companies, and thus cannot be taxed more. So you just go into self-employment and sell services to your former employer, as opposed to be an employee - voila, you pay a corporate income tax rate!

Both of those workarounds seem like not workarounds at all, at least if my vague understanding of US corporate laws is correct.  AFAIK, you can't use corporate assets for personal use, in any guise.

in any case (at least in canada) when an employee uses company property like cars or condo's they're taxed on the value of the use.

On the value of the use - which is lower than the value of the asset (at least if you take into account money-over-time).