[Just1689]

Not an American here but this could be related to the order in which things pay tax.

If you receive 10K USD as income one month, you would pay tax on that and then be able to buy things

If your business received 10K USD it could buy all sorts of things before declaring a profit and paying tax only on the profit.

[fastball]

Sure, but you can't just classify everything as a business expense.

And regardless, that's not really a carve out for the wealthy, that's just a policy we have because we think it encourages business growth, which is generally a good thing.

[lelanthran]

> Sure, but you can't just classify everything as a business expense.

If the business is buying it, then sure you can. There's limits on this for sole proprietors as the tax authorities will argue that the businessman who bought a yacht "for the business" only ever uses it for himself.

But the rich folk, who have 20% of the company (the largest share, usually), can force the company to buy a yacht where use is limited to that single shareholder ... once again proving that the rich would pay less tax than the poor.

[llimos]

Ok, but why can't I use the same system for my income, and deduct my essentials like rent and power and water before I pay tax on the rest?