[dougmwne]

What stops a person from creating a legal entity to funnel your activities through to personally avoid taxes? If the corporate tax rate is 0% and the individual tax rate tops out at 40%, the incentives to practice this kind of avoidance are strong.

[magila]

Existing tax law already covers this. If you use a corp to fund personal activities that is a benefit-in-kind and subject to income tax same as if you received the money directly.