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Gamers: Ethics & Religion Discussion of ethics and religion and what place they have around the gaming table. The point of this forum is to give space to all the ethical stuff that is or is not relevant that gamers insist on talking about anyway. Also much discussion of real-world issues including religion and politics. THIS FORUM IS NOT FOR THE THIN-SKINNED! You have been warned.

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  #51  
Old 12-13-2017, 04:13 PM
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Better question: Why would they? The current system works. Income tax is a tax on income, not wealth.
There are significant, compelling arguments to replace a tax on income with a tax on wealth.
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Old 12-13-2017, 11:22 PM
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An S-Corp files a tax return, for example, even though they have no general tax liability. The stakeholders can inherit a financial loss for tax purposes though they have no general liability -- the entire point of an LLC or S-Corp is distributed and shielded liability.
Both an LLC and an S-Corporation are legally distinct from their owners / shareholders.
And we need to know why. Otherwise, we don't need to have these various classifications.

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The government could make Rhaetic the official language of the United States tomorrow, in theory. If they choose to do so, we could then address the pros and cons. Until then, it remains a weird hypothetical with little real world application.
No. We address the pros and cons long before the government even considers the idea. It should be obvious enough that we don't want to decide whether going to war is a good idea only after we have gone to war.

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So, even though you were wrong, you you could be right if reality would just change? Wow.
The example was simply an example. It can be changed very easily if we want to bother being technically correct. And with or without the change, we have the same question. A little difference in paperwork can make a big difference in how much money goes to the government. Why?

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As for your question: Why hasn't the government implemented the double taxation you wail about?

Better question: Why would they? The current system works.
Does it? The fact that we can have major differences in taxes because of what seems to be trivial differences in reality argues it does not work at all well.
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  #53  
Old 12-13-2017, 11:35 PM
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There are significant, compelling arguments to replace a tax on income with a tax on wealth.
Which sounds like an interesting discussion.

David's question seemed to be, why aren't we double taxing people?

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The government can reverse the law and make the example the correct reading of the law. Why haven't they?
So he complained about a tax situation, it was explained that it doesn't happen that way, and he demanded to know why not. As in "Why won't they give me more to complain about?"

A truly dizzying intellect, to be sure.
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  #54  
Old 12-13-2017, 11:46 PM
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The example was simply an example. It can be changed very easily if we want to bother being technically correct. And with or without the change, we have the same question. A little difference in paperwork can make a big difference in how much money goes to the government. Why?


Does it? The fact that we can have major differences in taxes because of what seems to be trivial differences in reality argues it does not work at all well.
Okay, let's paint your example both ways, shall we?

Case A: You run a shop. You decide to incorporate as a pass-through corporation. The shop makes money, but doesn't pay any taxes on it because it passes all the proceeds directly to you. You, in turn pay taxes.

Analysis: Taxes were paid only once, by you.
Conclusion: No double tax.

Case B: You own a shop and decide to incorporate. You follow the same model as the big guys like P&G. The shop makes money and pays taxes on the net profits. You, by some legal means or other, transfer funds to your private account. You, having now earned some income, and subsequently pay taxes on it.

Analysis: Two separate taxable entities, your P&G style corporation, and you, paid income tax. You aren't the corporation, as far as income and taxes are concerned, and the corporation isn't you. Taxes were paid twice, but each payer was distinct from the other.
Conclusion: No double tax.

Arch may be able to fill in the blanks on whether there's a Case 3, as there are other types of corporations than those two, but as far as I know they pretty much all follow one of those models.

So you're asking why the thing you're afraid of, that you're complaining about, isn't the actual case, and your asking about/for changes in reality.

Sorry, but reality is what you're stuck with.
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Last edited by Windhaven; Yesterday at 03:10 PM.
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  #55  
Old Yesterday, 03:10 AM
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The example was simply an example. It can be changed very easily if we want to bother being technically correct.
Then provide a correct example.

I mean, there's always a first time, right? After lo these many years, you might produce a correct example? Maybe?
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  #56  
Old Yesterday, 03:58 PM
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Then provide a correct example.
We can just use Windhaven's version.

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Case A: You run a shop. You decide to incorporate as a pass-through corporation. The shop makes money, but doesn't pay any taxes on it because it passes all the proceeds directly to you. You, in turn pay taxes.

Analysis: Taxes were paid only once, by you.
Conclusion: No double tax.

Case B: You own a shop and decide to incorporate. You follow the same model as the big guys like P&G. The shop makes money and pays taxes on the net profits. You, by some legal means or other, transfer funds to your private account. You, having now earned some income, and subsequently pay taxes on it.

Analysis: Two separate taxable entities, your P&G style corporation, and you, paid income tax. You aren't the corporation, as far as income and taxes are concerned, and the corporation isn't you. Taxes were paid twice, but each payer was distinct from the other.
Conclusion: No double tax.
Nope. To put some figures in...
In case A. the corporation makes $10,000, and a tax of $2000 is due. Whether you pay directly or have the corporation pay, you end up with $8000.
In Case B, the corporation makes the same $10,000 and pays $2000 in taxes. The $8000 is now sent to you, and you have to pay $1600 in taxes, leaving you with $6400, meaning your money is double taxed. Why?
The corporation is a separate legal entity? But so was the case in A. So why does the government get the extra $1600? That the government passed a law makes it legal, not right or wise. And in both cases, the corporation was just a scrap of paper. The corporation or you provided society the same services and imposed the same costs either way. And the government too had the same tasks. So why the different tax bill? Or to put a different way, why should the government take any notice of what is really just some accounting?
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  #57  
Old Yesterday, 07:15 PM
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We can just use Windhaven's version.
Windhaven's version is fucktarded, much like Windhaven himself.

Let me explain. WARNING WARNING SIMPLIFICATIONS INCOMING

Quote:
In Case B, the corporation makes the same $10,000 and pays $2000 in taxes. The $8000 is now sent to you, and you have to pay $1600 in taxes, leaving you with $6400, meaning your money is double taxed. Why?
Because you and your accountant are both idiots?

Disclaimer, disclaimer, I AM NOT AN ACCOUNTANT OR TAX LAWYER, DO NOT TAKE MY SIMPLIFIED EXAMPLE AS A SUGGESTION AT TAX TIME.

In case B, the corporate taxes are paid after paying the salary of the owner/operator -- not before as you two featherbrains keep insisting.

Corporation B makes 10,000. You two chuckleheads don't have a clue between you, so we have to assume this is Gross Profit? I think?

Let's assume it's Gross Profit for the sake of argument, simplicity, and sanity.

GP - SG&A (which includes the salary + bonuses of the executives, such as an owner/operator, CEO, or president) = EBITDA

EBITDA - a bunch of possible deductions not relevant to our discussion = EBIT

"EBIT" aka Earnings Before Interest and Taxes. <----

This is the amount taxes are calculated on. Are you two morons with me?

So, 10k in GP. The only SG&A expense we know is the owner/operator salary of 8k. Leaves 2k.

Mix in the D&A, should leave even less, but we know the accountant and owner/operator are both morons, so we'll assume 0 for some reason that has never happened ever in business accounting.

Tax on 2k at the rate you fuckwits have been quoting = 400.

The owner/operator will then pay personal income taxes on the 8k. You will notice it was not previously taxed, because it was not part of the businesses taxable income.

What part of this is difficult?
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Old Today, 02:05 AM
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We can just use Windhaven's version.


Nope. To put some figures in...
In case A. the corporation makes $10,000, and a tax of $2000 is due. Whether you pay directly or have the corporation pay, you end up with $8000.
In Case B, the corporation makes the same $10,000 and pays $2000 in taxes. The $8000 is now sent to you, and you have to pay $1600 in taxes, leaving you with $6400, meaning your money is double taxed. Why?
The corporation is a separate legal entity? But so was the case in A. So why does the government get the extra $1600? That the government passed a law makes it legal, not right or wise. And in both cases, the corporation was just a scrap of paper. The corporation or you provided society the same services and imposed the same costs either way. And the government too had the same tasks. So why the different tax bill? Or to put a different way, why should the government take any notice of what is really just some accounting?
Key phrase in there, that cuts to the heart of your error:
Quote:
...meaning your money is double taxed
(Emphasis mine). This is your error, in a nutshell. It isn't your money. the first time. Its the corporation's money

Let's account for Archelos' insights, yet stick to your model for Case B:

The corporation earns 10,000 *TAXABLE INCOME*, which means it almost certainly took in quite a bit more in total revenue. The 10k is after expenses and deductions, the taxable total. It pays 2000 taxes on that. After that it pays a dividend to the shareholder(s), in this case 8000 dollars.

You, being the only shareholder, receive that money as *DIVIDENDS*, not earned income, and pay taxes on that. (Dividends are typically taxed at a much lower rate than earned income, but we'll ignore that for the moment.)

The difference between case A and case B is that in case A the company doesn't have any profit, no retained income. It must pass the money along to the stock holder(s). Functionally, it isn't a separate entity, for tax purposes. It passes your money along to you just as your bank does when you get electronic payments. They don't pay income tax on that money because it's never theirs. Same for your pass-through corporation.

In case B, it is a separate entity. It can make and retain a profit, and has to pay income tax just like you do.

The money was taxed exactly once per owner, when it came into the corporation's hands, and then when it came into yours. The double tax is an illusion. It feels like a double tax because you can see both parties gain the money, and thus see both parties pay the taxes. But that doesn't change the fact that they are two parties.

Now, why does the government get more tax money in case B than in case A? Because, as Arch pointed out, you and/or your accountant acted like idiots when you set up the corporation. You had a choice, and you made the wrong one.

Going back to your original example you said the company earned 20k, and that you moved 10k to your own account. That suggests that your company is incorporated as an entity that can make a profit that isn't yours. It can retain earnings, and doesn't have to pass them all along as pay or dividends.

Now, going all the way back to our original topic, the discussion was about estate taxes. In that situation, you don't have an option. There isn't any way to have your relative be anything but a separate person from you. They paid when they got the money, and the tax man came for another visit when it was time for you to get the money. Taxed once per transaction, once per owner, when it changed hands.

Again, no double tax.
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As a permit holder, one of your goals should be to never have a law named after you

"Remember, the pen is mightier than the sword!"
"Tell you what. You, me, dark alley. You bring the pen."
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