14 November 2017

First of the Pre-Thanksgiving Link Sausages

A general note on recent controversies: Neither gonads nor wallets have grey matter, so allowing either one to do one's thinking is necessarily brainless.

  • This should open some eyes in the general quasiconsumerish world, the world of those who look at the lifestyle of Taylor Swift and think it represents that of composers: The general/default poverty of the "unaffiliated": composer. Drawing the connection between the rhetoric of encouraging entrepreneurship in the wider economy and the actual barriers thrown up to entrepreneuers — ranging from unfair taxation until they incorporate to the tyranny of calendar-based payments and repayments expected of non-calendar-tied businesses (and people!) — by the cold, hard numbers-based economy. Getting to long-run success requires the ability to eat through the short run…
  • "Unfair taxation until they incorporate"? What the hell? Just stop and consider two things that the current tax system does:

    • Every penny of "the place to live" is deductible to a corporation or other business entity. Not just "mortgage interest," but rent, utilities, repairs, real-estate taxes, leases for office furniture, broker's fees … every damned penny. Try that trick on any US personal tax return; better yet, compare what an entrepreneur can claim as a "home-office deduction" to a business entity in otherwise identical circumstances. All by itself, this radically reduces the effective tax rate on comparable revenue for corporations, at least as compared to individuals.
    • Every penny spent on uniforms/attire, training, and education by a business entity is deductible. For individuals… not so much. The craziest distinction with individuals is that it's deductible if, and only if, it relates to either (a) one's current sources of income, or (b) a formal, degree-granting program. An individual-entrepreneur hairdresser cannot deduct the educational expenses (especially non-"tuition") of a wilderness-guide training program that is not affiliated with a recognized educational institution — or vice versa. A corporatized hairdresser, however, can. More to the point of the preceding item, an out-of-work individual-entrepreneur author cannot deduct the educational expenses (especially non-"tuition") of an automotive-mechanic training program that is not affiliated with a recognized educational institution — or vice versa.

    What this really comes down to is inept — even corrupt — interpretations of a fundamental principle of tax law: "Living expenses" (and "personal improvement") aren't deductible against income taxes, because they don't go toward generating income in one's existing line of business. Only expenses purportedly directly related to generating income in one's existing line of business (plus some "socially beneficial" expenses added to encourage certain kinds of business spending) are to be deducted from income before taxation. In short, business get taxed on their net; individuals get taxed on their net; and the two definitions of "net" are completely incomparable. So much for "tax reform" that ignores the difference. And thus, the megarich (who don't actually need these deductions) can continue to restrict the opportunities available to their social and inherited-wealth inferiors via decisions made and resources available years, or decades, in the past.

    Thus, the simplest true "tax reform": Rationalize the business-entity and personal rates; just make the concept of "expenses" deductible from income identical to both, independent of "form." If it's a "research and development" expense, deduct it; if it's a "necessary place of business (and thinking about business after business hours)" expense, deduct it. Without regard to whether the taxpayer is a natural or unnatural person. And for my next trick, I will demonstrate how to ensure that the children of Ireland are useful to their parents, or at least admit that the method for doing so needs to be discussed instead of dismissed as irrelevant.

  • It wouldn't hurt, either, to acknowledge something that this otherwise-praiseworthy piece at WaPo ignores: That its titular exemplar for rejecting homo economicus was a member of the inherited-wealth aristocracy, and wrote almost exclusively about members of the inherited-wealth aristocracy.