I asked the question sometime ago about why a "salesman" should be able to deduct the cost of operating his

Question

car while on business trips. I say that he uses his car just like I do, to take us to where we work. It is not my problem if he chooses to work "all over the place." Why should I have to help him buy gas and oil through taxes that I pay? None of you were able to convince me that I was wrong. Now, let us extend the thought. Why should ANY business expense be "tax deductable?" Why should I have to help a road building company buy their big machines with my tax dollars? Is this what people call "welfare for the rich?" Why not just have a simple tax plan with NO "tax write offs?"

Answer 1

Your approach is nonsensical. The operation of the automobile in sales is an expense incurred to derive income, which is THEN taxed. For your information, not ALL sales miles driven are deductible expenses. As an example, if a sales person has a local office and drives to the office from his home, that is treated in the same manner in which YOUR commuting expenses are treated.

Since no one else was able to convince you of the error of your thinking, I surmise that I won't be able to either. However, the fact remains that you ARE wrong.

Answer 2

You are taxed on your net income. Plain and simple. Certain deductions are allowed for business expenses, whether you are an employee or run a business.

If business expenses were not deductible, most companies would be bankrupted by the tax burden. I worked for a company that had gross revenues of over $6.2 billion per year and net taxable earnings of around $350 million. If they had to pay tax on the gross earnings the tax bill would have wiped out the profit several times over and bankrupted the company. That would have put nearly 40,000 people out of work.

The same thing applies to employees in careers such as sales. Their income looks princely when you don't consider the expenses. But once you factor those in, their income comes much more into line with the general population. If they had to pay tax on the gross earnings, they'd be bankrupted by the tax burden and the job simply would not be done. If the sales reps who work the deals with your grocery store weren't out there, there would be damn little sitting on the shelves for you to buy.

So, if you tax gross income, many companies would cease to exist and there would be nothing on the shelves at all. Of course, YOU wouldn't have a job either so it really wouldn't matter what was on the shelves. Much like a 3rd world nation, IMHO.

Alternatively, if gross income was taxed prices would have to be increased by an order of magnitude or more to cover the tax burden. YOUR out of pocket cash flow would drive your cost of living through the roof. Sure, maybe your wages would triple or quadruple to compensate, but guess whose tax bill would go through the roof as well? Yep, YOURS! You'd be in exactly the situation that you are right now, just the numbers would be a LOT larger. And with our graduated income tax, your tax RATE would be far higher than it is now.

Make sense now?

And forget the "welfare for the rich" crack. The top 4% of all earners pay over 90% of all taxes while the bottom 50% pay less than 10%. If that's "welfare for the rich" then you must be standing on your head.

Answer 3

That type of simple taxation idea is nice but there would be opposition to it. It would cure some gov't taxation rule problems and be the same for everyone, but it could stife economic growth.

There is nothing wrong with a company or a salesman or a couier or expeditor writting off business expenses. If they were not allowed to do so then the costs of doing business would be passed on to you the consumer and you would pay more for EVERYTHING!!! Remember that over 60% of all goods are transported by truck in the US and if disallow the business write offs then the prices for transport would double or more! So that loaf of bread would be $5 not a $1 as the maker has higher costs, the transport has higher costs, the store has higher costs and so now you the worker work to feed yourself and nothing else.

Business write offs allow the business to keep going and keep costs under control and pay taxes on monies after paying expenses. Remember that businesses do pay taxes when they buy things and not all are written off. They are not buying things with your tax dollars but their own money.

Why don't you do the same and enjoy the benefits of write offs? Start a business or become a contract employee who can enjoy a break on your taxes. Your not going to pay zero taxes, just not as much income tax.

Answer 4

If I understand you concept I would have no deductions for the expenses I have in running my widget company. Say I have a gross sales of 1 million and the expenses I have to earn that million are $980,000 you would like me to pay tax on the 1 Mil. On the other hand you as my employee who receives a wage of $40,000 plus union benefits would pay tax only on your salary. How long do you think that I would stay in business? Therefore the question would be, how long would you have a job. You see I am getting a tax "break" because I provide the tools with which you make a living.

Answer 5

Tell me this:

Why should a salesman make LESS money because his boss requires he travel for his job?

If you think the sales life is all big money write-offs and glamorous travel, take a job and see the truth.

And if you are looking for "fair", why is it fair that people with more kids pay less taxes than I do? I didn't choose to have their children, I already pay for the brat's education, why should my tax burden be heavier, because they like to have unprotected sex?

Answer 6

Do you itemize deductions? Do you defer tax on some of your income by contributing to an IRA, 401K, etc?
Why should I have to pay more tax to offset those "deductions" you are taking?
Get it now?

Answer 7

I would urge you to go back to school and take a class in economics; thereby you would have a better understanding of the business world; which, by the way, is a real jungle.