[guimarin]

When people bring up this argument, I feel like I'm screaming in a room full of people and everyone is ignoring me.

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.

[harryh]

If you are actually doing what you describe then you are breaking the law and will eventually be caught and hit with a gigantic bill for back taxes plus a hefty fine.

[kb101]

Not at all. Setting up trusts like this is what family offices do for wealthy people. The goal is to legally structure everything so that the total tax bill is minimized. High net worth individuals never just have a big fat bank account and a stock portfolio, there is always an array of trusts typically set up as LLC's to minimize tax exposure. It's unfortunate that he's being downvoted into invisibility (presumably due to the irritated tone of his post) but the fact is that he is correct in his assertion.

[mdda]

Your living expenses and rent are a benefit you receive as an individual from the company, with a direct monetary equivalent : You should be declaring it, and paying tax on it.

[brc]

You're right, of course.

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.

[cperciva]

I can't speak to the US tax system, but people absolutely don't get away with doing that in Canada. People try it, of course; but the Canada Revenue Agency is very good at catching "benefit conferred on a shareholder" and taxing them as deemed dividends.

And, of course, throwing people in jail who deliberately fail to report such benefits.

[guimarin]

thus the army of lawyers, accountants and golden shares. It's good to live in a globalized world.