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Comment by maratd | Hacker News Reader

Wow. OK. I'll spell it out for you gentlemen. I discover $1000.00 in my bank account. Before, I just had $50.00, so this is quite a boost. I wanted to move my business (me, myself, and I) from just regular handiwork to cutting down dead trees. Before, I couldn't afford a chainsaw, a ladder, and safety equipment. Now I can. I can also afford some advertising, business cards, and a decal for my car. Now multiply me by a 1000. You've created jobs in the chainsaw manufacturer, ladder manufacturer, advertising agency, printing company, and the decal making guys. Get it?

Please stop assuming the pie is always fixed. Demand is not always being met. New markets are being created all the time. Oh, and while tax breaks don't affect the function of your imagination, they sure do help with bringing stuff out of your imagination into reality.

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Okay, you are stating it as if the money ($1000) is 'found'. But what we are describing is tax breaks, not the lottery. Tax breaks just mean less money paid on profits.

In order for you to suddenly have $1000 more, you would already have had to have had the money. In your scenario, where did the $1000 come from? You are talking about a small business loan where you have no revenue and are starting a new business, not tax breaks.

Show me where in my post I was talking about a "small business loan", "no revenue", and "starting a new business". I was talking about an existing business branching out into a new market. I am not going to repeat myself again.

I believe they are saying that you would have bought the chainsaw, ladder, etc tax-free already, as a business. A tax break would have absolutely no effect on the ability to afford these things in the scenario you described. The "found" money is therefore more analogous to a loan than a tax break.

The way a one-man operation works is that you file taxes once a year. For you to be able to pay your income taxes, you need to save up the money you will fork over, otherwise your ass goes straight to jail. There is no withholding or anything like that.

So you set up two bank accounts and deposit say 30% of any money you would use for your non-business expenses. That money is forbidden. You cannot touch it.

> I believe they are saying that you would have bought the chainsaw, ladder, etc tax-free already, as a business.

Pay attention. With what money? You have no money. ZERO. All your money goes toward your business expenses and the rest goes toward non-business expenses and taxes.

You have no business credit. The only credit you have is personal and that's maxed out.

The overwhelming majority of one-man operations are not drowning in cash.

> A tax break would have absolutely no effect on the ability to afford these things in the scenario you described.

This makes ZERO sense. With a tax break, I can withdraw some of the money from my tax bank account and use it for whatever I want. It is found money. On top of that, spending that money on my business means I have no tax obligation on those found funds.

If your business expenses are higher because you're buying chainsaws, then you're putting less money in your 30% "forbidden" bucket. It's a wash.

your ability to buy a chainsaw is defined by your revenue, not profit. if you spent all your money you'd pay zero income tax. One can argue that higher income tax will actually encourage you to spend more.

If a sole proprietorship (i.e. one man operation) spent all its revenue on the business, the owner would die. Food is not a business expense. Neither is clothing, rent, car, etc.

Don't confuse corporations with a large payroll with people who are self employed.

> One can argue that higher income tax will actually encourage you to spend more.

A higher income tax will actually encourage you to live in a cardboard box. You will have to purchase that box, so in that way, I suppose you're right.

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