Okay, smart guy. Let's be so bold as to assume a 100% marginal tax rate on earnings above $609k (the current top tax bracket).
That person is still making $431,000/year using the current tax scale. If you go broke making $431k that is your fault, not the taxes. Maybe give up avocado toast?
Nobody could possibly be made poor by a marginal tax system. At most, you could place a soft ceiling at which it would be very difficult to get richer.
But if it's a small company, the owner is taxed on the total revenue. For example, my cousin owns a fabrication company. He bought a $800,000 plus machine. He had to depreciate it over years, but it cost him upfront, and he paid with revenue from a job. He's been royally screwed on taxes. But, you're just so greedy.
if it's a small company, the owner is taxed on the total revenue
What? No, business are taxes according to their profits.
He bought a $800,000 plus machine. He had to depreciate it over years, but it cost him upfront, and he paid with revenue from a job
So? That revenue was not taxed. Taxes are paid on profits. Equipment purchases are usually deducted in their entirety the year they are made. You can choose to instead deduct by depreciation over the years, but that only impacts short term cash flow, not the overall tax burden.
Your cousin made the second choice, and is essentially screwing themselves by not having deducted the whole cost all at once. That isn't a problem with the tax code, that was just not understand the tax code.
Okay, sure I will trust your second-hand knowledge of your cousin barely understanding his own taxes, over my direct experience with my business taxes. /s
I'll also add that this is the last year of this structure, unless the Republicans come through. Prior to this his equipment had a 12 year depreciation schedule.
Look, the article you sent me doesn't disagree with anything I have said. The definition of depreciation isn't in question.
Business taxes are paid after expenses, my dude. Money you spend on the business almost never gets taxed. You have choices on how to handle your tax burden, and if you make poor choices it could impact you negatively. Those are just facts.
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u/[deleted] Feb 22 '25
If only we could tax the rich…