[gruez]

>could count housing expenses, food expenses, education costs, healthcare, entertainment, vacations, vehicle purchases

That's what the standard/itemized deduction is supposed to represent. The problem is that we obviously can't let you deduct everything, because if you can deduct everything there would be nothing to tax, aside from savings. And you really don't want to tax savings because savings (also known as "investment") is what makes the modern economy possible.

[energywut]

I most certainly cannot deduct housing, food, entertainment, vacations, or large purchases.

> The problem is that we obviously can't let you deduct everything, because if you can deduct everything there would be nothing to tax, aside from savings.

This is the point the parent poster is making. We say that it's ok for corporations to deduct everything, but not the people? Why are we ok with that?

[gruez]

>This is the point the parent poster is making. We say that it's ok for corporations to deduct everything, but not the people? Why are we ok with that?

Because companies, to some approximation, are pass-through entities, so it doesn't make sense to tax them. Most of the stuff you buy are for own use/consumption. Food is an obvious one, but so are movie tickets TV and last year's European vacation. Companies don't do any of that. It doesn't need food, movie tickets, or European vacations. It might buy flight tickets for its employees to go on sales trips or whatever, but it's not for the company itself. Moreover if you're buying stuff for business purposes (eg. you're a contractor and need a flight ticket to go meet your client), you can deduct it too.

More practically, taxing revenue or not allowing companies to deduct expenses would heavily encourage vertical integration. A vertically integrated widget factory will only have to pay such a tax once, but a widget factory that buys its sheet metal from a foundry, which gets its ores from a miner will have to pay the tax 3 times. That's bad for the economy because it discourages specialization and division of labor, which is basically the other pillar of the modern economy.

[vel0city]

> Companies don't do any of that. It doesn't need food, movie tickets, or European vacations.

And yet they sure seem to cater a lot of lunches and dinners, pick up the costs for large corporate events, pay for suites at event venues, and fly executives around the world in private jets.

[gruez]

>And yet they sure seem to cater a lot of lunches and dinners,

Those are taxed at 50% rate, specifically for this reason

https://www.irs.gov/publications/p15b#en_US_2025_publink1000...

>pick up the costs for large corporate events

define "costs"?

>pay for suites at event venues, and fly executives around the world in private jets.

If it's for legitimate corporate purposes, I don't see the issue, because as a contractor you can do the same deduction. And while I'm sure there's some non-zero amount of improper expensing going on, the amount relative to income taxes paid by the employee makes this a non-issue in practicality. The IRS has better things to worry about than grilling a company on whether some executive's 1 week stay at a $500/night hotel (tax value: $3500) was a proper expense or not, when the executive makes $500k+ TC.

[mulmen]

$500.00 a night is $182,500.00 per year. That’s 20% of comp. What “better thing” does the IRS have to do? I don’t disagree with you that the IRS has limited time and resources and should maximize their impact but comparing a nightly expense with annual income doesn’t make that case.

[tonyhart7]

because they force you to open bussiness

[vel0city]

> That's what the standard/itemized deduction is supposed to represent.

If they wanted you to deduct housing costs they'd just let you deduct housing costs. Instead they play games about mortgage interest deductions because they want to incentivize certain kinds of living arrangements over others and give handouts to some voters but not others.

I agree the idea of only having households pay taxes on savings is pretty much untenable with existing revenue structures and would be disencentivizing things we want to incentivize. Just pointing out how corporate taxes just seem pretty absurd from what households pay in comparison.

Let's imagine two groups of people. One group gets a bonus and takes that money to go on a cruise. Easily 30%+ of that money gets taken by income taxes (including FICA). The other group gets their company to just pay for them to go on that cruise as a team building exercise/corporate summit/planning meeting/whatever you want to call it. That's negative taxes in the end, the cost of the business operating, it's a cost that offsets revenues. Good luck getting that audited and declared taxable.

Totally seems fair.

[derefr]

> Instead they play games about mortgage interest deductions because they want to incentivize certain kinds of living arrangements over others and give handouts to some voters but not others.

Your "they" is doing a lot of work here.

In reality, this system isn't top-down; it's bottom-up. Influential groups of voters (corporations, sure, but also just various stripes of "rich people" — and even upper-middle-class people at the municipal level) go out and lobby their local and regional representatives to get exceptions carved out for them (and, mostly coincidentally, people like them.)

The voters who don't get handouts are the ones who have no political influence.

(Fun fact: our current situation with capital-gains taxes, was an attempt to "rationalize" a system that was previously similarly cronyist in shape. It used to be that there were particular exceptions carved out for investment classes A and B and C that rich-and-influential people invested in, and none carved out for your regular Joe. People got mad, and the government's solution — rather than removing the carve-outs — was to just make them equally accessible to everyone.)

[gruez]

>That's negative taxes in the end, the cost of the business operating, it's a cost that offsets revenues. Good luck getting that audited and declared taxable.

How is that negative taxes? At best it's tax free, but calling it negative tax (because it's lower than the alternative?) is double-counting. Moreover AFAIK this sort of tax evasion mostly happens at the small business level (eg. a plumber buying a pickup truck and then using it to go to the grocery store and pick up his kids from soccer practice), but it doesn't really happen at the corporate level because 1) such spending will almost be in contravention of corporate governance policies and be flagged by auditors and 2) you need so many people in on the conspiracy that it's impossible to keep a lid on it. Plenty of companies get flak for their subsidiaries in tax havens, but I'm not aware of any serious allegations of corporate tax evasion by the way of fringe benefits.