Comments on: I want to pay tax like a company!

By: Vivek Rauniyar

Vivek Rauniyar — Mon, 08 Jun 2009 17:30:18 +0000

Hi All,
If people are taxed like companies, they wouldn’t have any incentive to save money (Safely assuming that a person saves for future expenses)simply because he can break up a future expenses into so called EMI’s which the market might be willing to offer and buy his needs today itself. With no saving, there wouldn’t be any growth as everyone does the same. Hence individuals need to be taxed for revenues and not profits.

By: shubham

shubham — Fri, 05 Jun 2009 09:32:02 +0000

@Gaurav Choudhari
Hi Gaurav, the double taxation is being talked about when first you pay income tax (1st tax) and then when you buy anything you pay (sales tax) and many other taxes. Double taxation

Thanks for the comment Ruchir. The point is debatable whether savings will be there or not but the model is definitely worth exploring.

By: ruchir

ruchir — Fri, 05 Jun 2009 05:56:48 +0000

Celebrities part sounds very true and the system does tend to favour a bit the companies with higher margins. But i guess even if individuals get to be taxed like a company, incentive to save will be there as i feel both are independent. Infact govt then doesn’t have to bother about public infrastructure. But again lower tax regime I am not sure, plus right now i cant think of any exemplary model.

By: Gaurav Choudhari

Gaurav Choudhari — Fri, 05 Jun 2009 05:11:50 +0000

Excellent article, got to know lot from the article. Thanks for explaining it in simple terms for a person who is lehman to the financial terms.

The only thing i would like to know is how are we taxed twice? can soem body enlightrn this point?

By: maximus

maximus — Tue, 02 Jun 2009 13:53:31 +0000

@Atul, is it ethical? Probably not.
@Darren, I think an individual can be considered management of his own firm. Assets – Liabilities = Equity which is what individual is worth.
@Abhishek, you are right but now money is actually being taxed twice.
@Kiren, exactly why companies can’t be taxed on revenues.
@Debashish, thanks for pointing out how we are bring double taxed. I too hate it.
@Gaurav, Agree everyone is misusing it.
@Kaushkik, there are many loopholes but this one really makes me sad.

By: Kaushik

Kaushik — Tue, 02 Jun 2009 09:36:38 +0000

Oh come on, there are so many flaws in the tax system – I think the author is not even speaking of them – he is speaking of a different issue

By: Gaurav Parashar

Gaurav Parashar — Tue, 02 Jun 2009 08:10:00 +0000

Interesting!
I think this is a fairly common practice to evade tax, why even talk about the movie stars. Lawyers and other individual run businesses evade taxes by showing expenses in the office; while instead using them for personal use. I have seen washing machines as expenses on balance sheets of lawyers . There is a flaw in the system though the intent seems to be right!

By: Debasish

Debasish — Tue, 02 Jun 2009 07:35:39 +0000

Nice post!
Ideally government can tax individuals on income, and cover for any shortfall by taxing expenses (consumption) like it does today through indirect taxes on goods & services.

Indeed, in the current dispensation, govt is taxing individual income twice, once at the overall earnings level and then again during consumption expenses…which looks even more unfair compared to companies

By: Kiren Tanna

Kiren Tanna — Tue, 02 Jun 2009 07:24:45 +0000

Companies dont pay tax as a percent of revenue as margins of companies are totally different and that would give undue advantage to high margin companies (e.g. high margin companies like pharma will pay much lower taxes than low margin ones like say commodities)
Individual taxes are percent of revenue because that makes it solves the moral hazard problem u descrive and also much easier to manage for the govt (u cant have ‘auditors’ signoff individual income statements for all persons).

However its fairly common for self-employed or contracted individuals to setup companies and book their expenses under the company account thus making them pay a ‘corporate tax’

By: Abhishek

Abhishek — Tue, 02 Jun 2009 05:28:20 +0000

Nice observation.. I completely share the sentiment. Though, the standard principle for income taxation is that all income should be taxed once and all income should be taxed just once. The income that we earn as salary is tax deductible (employee remuneration) for employers and therefore taxable for us. What we spend is income for someone (a firm) and therefore not taxable as we have already been taxed for it; the firm is taxed on the residual part.