The most blatant thing for me will always be the tax code.
Alone way that W2 income vs long term capital gains is taxed (not to mention that losses are fully tax deductible) makes the message very clear.
The most blatant thing for me will always be the tax code.
Alone way that W2 income vs long term capital gains is taxed (not to mention that losses are fully tax deductible) makes the message very clear.
Looking at the current capital gains rate is actually too rosy, since there are so many loopholes and exceptions that wealthy people can use to bring the rate down. The actual effective tax rate billionaires in the US pay is below 10%.
I doubt something like this will ever happen given how many selfish interests would fight against it. It sure would be great though if middle class workers didn't pay a higher tax rate than millionaires.
[0] I'm throwing out round numbers but have seen research that backs up figures in this ballpark.
The point is that in the business context, expenses required to create income are deductible. If you get paid on a 1099, you get treated as a business and can take those deductions. You can even claim a section 179 accelerated depreciation, and immediately deduct half of the capital expense.
The point is there are many such deductions that businesses straightforwardly take, that natural persons are told it's all "personal use", despite them being directly necessary to sustain person-as-an-economic-actor.
But on the second hand (and this was my main point here), these are deductions that businesses already get to take. Get routinely paid on a 1099, and see all the deductions you can take essentially by virtue of now "running your own business". It's obscene. Perhaps set up an LLC+S-corp for even more.
But on the third hand, I get the argument that if we just eliminated business deductions in general, that "thin businesses" would be impractical.
To offset regular income, it's only $3000 a year but losses can be carried forward (though it stays at the dollar value, no inflation is taken into account).
So often largely deductible with some caveats.
It still seems asinine that bad investments are essentially tax subsidized, but whatever.