[PurpleBoxDragon]

>Over a reasonable horizon, you weren't profitable.

The average worker isn't allowed to do that even when they lose money in a given year. Why is it so naturally assumed to be acceptable for a business to do it? Maybe the time is to just remove the loopholes in general from both business and personal income taxes.

[OrwellianChild]

If the average worker has any stock or index fund investments, that worker absolutely can take advantage of this (in the U.S.). It's called tax-loss harvesting - worth reading about here [1].

[1] https://www.madfientist.com/tax-loss-harvesting/

[codexon]

You can only harvest $3000 in losses per year if you have more capital losses than capital gains.

That is laughably small.

And you can't deduct the losses from your other income while you can as a business.

[anigbrowl]

There is no good reason investment income should be privileged over income from labor.

[MetalGuru]

Tax-loss harvesting is different than carrying losses from previous years forward. And in the case of tax-loss harvesting, the company wouldn't be realizing massive profits for that year because said profits would be offset by investment losses.

[ramshorns]

The average worker probably doesn't have any investments and is losing money by having more expenses than income.

[gameswithgo]

>If the average worker has any stock or index fund investment

we don't

[andrewla]

Business taxes and personal taxes are different. Businesses pay taxes on income, while individuals pay taxes on revenue.

The differences are significant enough that any sort of parallel like this does not hold a lot of value. Yes, it might make sense to disallow this for corporations, but the justification seems reasonable -- it's not a loophole that allows corporations to take home huge amounts of money without paying taxes, it just allows them to deal with time horizons longer than one year. As it is, a gain in the second half of the first month of the year can be offset by a loss in the first half of the first month of the year, just because of reporting frequency.

[AlexTWithBeard]

Individuals pay taxes on income as well.

Professional expenses are usually deductible, but most of W2 people (including myself) don't have too much to deduct.

[objektif]

Individuals pay taxes on their own income.

[Stratoscope]

From 1964 to 1986, individuals were allowed to average their income over five years. (Or was it four?)

Now only farmers and fishermen are allowed to do this, and some retirees who receive a lump sum retirement plan distribution.

[nsxwolf]

What do you mean by "lose money"? There are plenty of kinds of losses that the average worker might incur that would offset their income tax. It could be a capital loss on an investment. It could be casualty losses from theft or a fire.

[MetalGuru]

Casualty losses are tax deductible? That seems like it would be hard to verify if you got audited.

[a-priori]

I don't know about American taxes, but at least in Canada individuals can do this for capital gains / losses.

If you have investments that produce losses one year, you can carry those losses forward to cancel out capital gains in following years and reduce your tax payable.

[lorenzhs]

In Germany, if you have less taxable income than tax deductions, you can carry that loss forward, too. It's a rare case, though, but it can save you several thousand when pursuing a second degree.

[el_cujo]

This is how it works in America as well.

[throwaway190102]

Individual workers are allowed to do this. In the form of deductions for various types of expenses such as medical and various other deductions.

But it means something different to make a wage and to make a profit. There are definitely loopholes to close in our busted tax system, I agree with that 100%. While we are at it we should eliminate all subsidies for various types of carved out businesses from oil to corn. But Characterizing loss calculations as a loophole I don't think is correct. If I'm not mistaken most corporate tax schemes in the rest of the world use similar concepts, it's a fairly basic accounting concept.

[int_19h]

> But it means something different to make a wage and to make a profit.

Why? Other than "because our tax law says so"?

[anonymous5133]

The reason it is like that is because the United States wants to encourage business activity in this country, so they make businesses have preferential tax systems.

but I agree with your overall statements - the rates and tax system for personal individuals is ridiculous and it gets worse the more income you make. For me personally, I intentionally took a demotion (and pay cut) because it isn't worth the sacrifices you have to do to get the higher salary. More stress, more responsibility, more extra unpaid overtime you have to work, more headaches etc. SIGNIFICANTLY MORE. Then what is the reward for all this extra headaches....you get 50% of the pay raise. So I said forget about it. The extra money isn't worth it if you only keep 50%.

[AlexTWithBeard]

An average worker has few job-related expenses.

[pbhjpbhj]

A lot of workers need a vehicle (or season pass on public transport), need a different location for their dwelling - both of these amount to a pretty hefty addition to a workers costs.

[int_19h]

Everything that is necessary for a human to function is job-related expenses for somebody who is working. We just choose to not recognize it as such.

[njarboe]

A huge amount of tax code complications and unfairness is due to the fact that companies get taxed on profit while people are taxed on income. People then try and have their spending done by their companies instead of personally. Mostly this is only possible for wealthy people.

We should really tax companies on income to eliminate this unfixable situation. Fiddling with the tax code will not work. Personally, I would like this problem solved by a national land tax and the permanent elimination of the income tax by constitutional amendment. People trading with each other is a win/win situation. We should encourage that, not tax it.

[prostoalex]

Average (or even above-average) W-2 worker - no, a self-employed individual or a single-person LLC - yes.

[ralala]

Because this rule is necessary for businesses to be able to invest on long term goals.

[spikels]

How does the average worker make a loss? People are not going to be working for negative wages. Only investors or business make loses.

[chongli]

Why is it so naturally assumed to be acceptable for a business to do it?

Because a business isn't a person. Taxing a business is taking real money away from payrolls, money that would get taxed again anyway once it was paid out.

Corporate income tax only makes sense when you look at it as a barrier to entry for competition in the marketplace. Big companies like Netflix know how to avoid taxes. Small companies don't. Thus corporate income taxes help to protect big companies from disruption by small ones.

[kelnos]

The actions that most companies took after the corporate tax cuts were passed proved that taxing a business does not in fact take money away from payroll. When you give that money back to businesses, they either bank it, do share buybacks, increase their dividends, and occasionally re-invest in capital expenditures or give some employees a pitiful one-time bonus that in no way reflects the magnitude of the tax break they've been given.

[deeviant]

Except a large portion of revenue does not go to workers, but to shareholders, who pay far less taxes then those who strain their backs in creating said revenue.

[JDiculous]

> Taxing a business is taking real money away from payrolls

By that same logic, taxing personal income is akin to taking money away from the goods/services/investments that that person would've spent that foregone income.

There's nothing special about businesses that warrants them special privileges.

[AlexTWithBeard]

Taxing a business is taking real money away from payrolls

Correct me if I'm wrong, but I think payroll expenses are not a part of profit, so no double taxation here.

[nikanj]

Citizens United v FEC disagrees with you.