Tuesday, February 25, 2014

Untaxed Forms of Income

Real estate investor John T Reed on untaxed forms of income,

"Think about the early settlers in the U.S. They were better off financially with each passing day. What income tax did they owe? None. And if you did the same as them now you would owe nothing, too.

They acquired a piece of land, cleared the trees and stumps, started building a cabin, planted crops, harvested them, and ate them. Over time, their home got bigger and they also built fences, barns, and expanded their farm fields. Were they working? Yes, very hard, but they did not receive any taxable income. They ate the food they grew, the game they hunted, the milk from their cows, meat from their livestock. None of those things is a taxable event."


Anonymous said...

One threat to GDP going forward is that a lot of two income households might prefer to live off of one income and avoid a lot of taxable transactions. In high tax states it's easy to imagine households where the post-tax income of the lower-earning spouse is essentially negated by additional costs (which are themselves exposed to taxes).

In general it's quite striking how much social engineering is implemented through taxes with essentially no regard for how people will respond to them. Things like the preferential treatment of passive income to wages, or the mortgage interest deduction, create distortions that benefit a few, but ultimately reduce the ability of the economy to produce things people actually want.

CP said...

Great comment.

When you consider the crippling public school propaganda that children of two-income parents receive, it's clear that the stay-at-home families are coming out way ahead in the long run.