Incorporate dreams

Every time I suggest eliminating the corporate income tax, I am beset by horrified people saying "But . . . what's to stop me from becoming a corporation and evading taxes that way?"

Well, what's stopping you now? Your rent is money thrown to the winds; a corporation's rent is an expense deductible from income. Your car payment is a millstone around your neck; for a corporation, it's another deduction. Your travel is an expensive pleasure; corporate travel just further ratchets the amount Uncle Sam collects at the end of the year. Even at a 35% corporate income tax rate, this would be a big net win for most people. So why don't you become a corporation and take advantage of this fact?

Because the IRS won't let you, that's why. When the "corporation" buys things that are clearly for your consumption, that's taxable income to you. People who have thriving businesses and report very little income get a long, hard look from the audit department, and usually walk away with a hefty penalty for tax evasion.

There's no reason that it would be any harder to keep people from evading taxes this way if we eliminated the corporate income tax. The IRS would catch you the way they catch most tax evaders: comparing your alleged income to your bank accounts and zip code. This is why you occasionally see bewildered live-in housekeepers on television surrounded by a squad of auditors.