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by ds_opseeker
682 days ago
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All of which is strong argument in favor of replacing all income tax with land tax. The idea starts to make a lot of sense once you look at its framing. This includes the argument you make above (why can't you hire help out of pre-tax income, like any other business can?) and more on the legitimacy of taxation. https://lawliberty.org/book-review/georgism-revisited/ |
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Leaving aside the obvious fact that your personal activities are not a business[0], you can indeed hire help out of pre-tax income -- in the U.S. no one pays income tax on their gross income, only their taxable income. By the time common tax credits are factored in, a married couple with children may easily have $30-40K of gross income each year not subject to income tax.
Many, if not most, homeowners do not need to go out and work extra hours to pay someone to do work to repair their property, any more than they need to work extra hours to pay for food and clothing, so looking only at the marginal tax rate is misleading (as in the example above of earning an extra $167 to have $100 after tax).
Further, work you pay for that improves the property (as opposed to repairs) is added to the tax basis of the property, reducing future taxable income when the property is sold. Along with the potential to exclude up to $250K/$500K (single/married) of gain[1] from selling the property is a huge source of pre-tax income.
[0]and even businesses can only deduct expenses for people they hire for services that are related to generating a profit.
[1]Section 121 exclusion