Comment Re:40x income is still 40x paid to gov't (Score 4, Interesting) 191
If there are literally no deductions, then the tax is on gross revenues rather than on profits, and that's just not feasible for people running businesses whose profit margin is small, or who have significant costs associated with their employment (e.g., rideshare drivers need to keep up a motor vehicle).
So, at the very least one needs deductions for the expenses that were spent to gain the revenues. But now a lot of complications come back. Do we allow expenses to get carried over? And what exactly counts as an expense? Some jobs require a uniform and some jobs just require looking business-like--do both types of clothes count as a deductible expense or only one? Say, you travel for business. Do you get to deduct the full cost of food when traveling on business or the cost of food when traveling minus how much it would cost to eat at home (and how do you calculate the latter)? Do you cap the cost of the food you can deduct? You probably should be able to deduct the cost of entertaining clients. But what counts as entertaining clients and what is just having fun with people who happen to be clients? Or you buy a painting to put in your office. Is it there for you to enjoy, or is there "a business purpose" for it, say to impress clients with your taste.
And, anyway, what is income? If someone gives you a gift, that's just a gift, not something you earned. But what if they give you the gift because they were impressed with how nice you were on your job or how smart you are. Now it's a tip or a prize. What if instead of giving you money, they give you a meal? If that counts as income, then do you tax that based on the retail price or the price it costs them to give it to you? And if it doesn't count as income, we have a giant loophole where you can be paid in kind instead of in money.
I am afraid that any system will raise a ton of questions, and now we need tax lawyers. Sure, we can reduce how many we need. But it will still have complications.