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Comment by lordnacho | Hacker News Reader

Problem with that is people can then make companies and keep all their wealth in there until they need it.

Which might mean nothing gets paid but a minimum.

That's exactly what it means. And if corporations can earn investment / passive income untaxed, then everyone would just keep their portfolios inside a corporation and draw salary for exactly what they need and nothing more.

You can already do this, but it would only result in being taxed twice—first when you earn your wealth as ordinary income or capital gains, then again when you draw the salary or dividends from the company. No such thing as a self-licking ice cream cone (without committing tax fraud).

ETA: Getting your employer to pay your company instead of you would be tax fraud.

> ETA: Getting your employer to pay your company instead of you would be tax fraud.

Isn't that what people do if they are contracting?

Contractors pay income tax.

I think this might be a US specific thing.

Dunno about other countries, but it seems unlikely it'd be different unless their tax authorities were born yesterday. Then again, by US standards most other countries make tax evasion a national sport, so I guess it's conceivable.

So for instance in the UK you can have a company that pays corporation tax at 20%. If you don't pay yourself anything out of it, that's it. Why would you have income tax to pay?

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