There are a whole host of corporate entities which allow for pass-through taxation: LLC, S-Corp, sole proprietorships, and the like. I'd be surprised if European countries didn't have similar mechanisms.
Believe it or not, they mostly don’t. It tends to be fairly binary. Corporations have legal personality, including separate tax identity, so no pass-through taxation. Sole proprietorships have pass-through taxation, but no legal personality (incl. no limit to liability).
Intermediate entities like LLCs are a relatively recent Americanism that’s unusual in the rest of the world.
sole proprietorships are taxed at personal income level but pay pension contributions and/others at a % level, the game became unwhorthy at six figures levels. the way out are paying the lifestyle like SUVs with company funds (deductibles) and if worthy setting paper boxes to pay lower taxes. Example: San Marino offeres Trust funds that are easily taxed at 1.7% on income (can take money out after 2 accounting years). quite handy to build family/long term wealth
That's how taxes work generally though. I already paid income taxes on my salary, but when I spend it on something I have to pay taxes again, and then the retailer has to count it as taxable income as well. Anytime money changes hands the government gets its vig. I don't see how the corporate tax is so egregiously different.
No, if we are talking about VAT then companies have to make the following sum
€800 VAT the company charged to clients
€500 VAT the company paid to suppliers
===== -
€300 VAT the company has to pay to authorities
This system makes sure that VAT over any good will only be charged once. VAT usually rolls over from one company to the next till it reaches its destination, the consumer.
ULTIMATELY, the consumer pays the VAT. The consumer cannot deduct VAT.
I doubt anyone makes this mental calculation when they’re considering buying something at a store.
Sure, big ticket items people might shop around for a lower tax but will they not buy something based on minimizing the amount they pay to the government?
No one is saying it's egregiously different. The question was why corporate taxes are lower than personal income taxes, the answer is that there is no logical reason why they should be equal or higher. No one complains that their sales tax rate is lower than their income tax rate.
Then where do we get the money to pay for things like the justice system, law enforcement, national infrastructure, unemployment benefits, healthcare, pensions, customs, diplomats,...? Switch to a system where the government owns everything and gives people what they need if they work properly?
The MMT argument for taxation is that it's necessary to encourage demand for a currency, thus making it more valuable. But there's no fundamental reason that a government which controls its own currency must collect taxes to pay for various services.
Congress could pay state and local governments directly each year.
If you're willing to throw away some property rights, then state and local governments could theoretically lease land as a means of raising revenue without direct taxation. (this is a terrible idea)
Predictable large inflation each year with no taxes may make theoretical sense in some models. But it seems like it would not be compatible with human psychology.
My favorite MMT detail is the currency lock up accounts to reduce inflation. Basically they prevent people from spending money until inflation decreases. They claim it's not confiscatory as people will get their money back eventually and not taxation because it's the same amount of money. Despite their claims it is indeed both of those things as the real value of the money has decreased.
The government's fiat currency would be worthless without a complicated system of taxation in order to create demand for it. No private individual or business would be interested in selling their goods or labour to state and local governments in exchange for fiat, unless they are forced to have that fiat in order to pay taxes - and here is included mortgages to the banks, since it is 100% a tax as well.
This is what people forget about (especially tech minded people), when they think up new systems of taxation that would be more fair and effective: Any fair and effective tax would destroy the currency, since people and businesses could easily pay their share and then instantly convert their remaining wealth into non-fiat assets, or even safer fiat assets. In order to prop up the value of the fiat currency, the tax system needs to be extremely bureaucratic and reach into every and any kind of economic activity imaginable. That way there is a constant need for businesses to keep that fiat on hand and do their accounting with that fiat.
> If you're willing to throw away some property rights, then state and local governments could theoretically lease land as a means of raising revenue without direct taxation. (this is a terrible idea)
I think OP means that there should be one or the other, not both. Just increase the rate of one if you need more money instead of inventing a new one to double-tax the same income stream
