Apologies. I should have clarified. United States of America.
I don't believe it's dysfunctional for this particular reason. There are for sure trade-offs between simplification & trying to optimize for the best outcome. A simpler tax code would be nice but then people on all sides of the political aisle would start saying we should really give X a break for Y reasons and that's how it seems to get complicated.
There is literally a 20% tax break for most small businesses this year in the US.
Healthcare can be cut in half if you are below certain requirements but make a $1 more & you pay the whole bill. This one I agree seems silly. Though it's maybe to simplified & should be more complex with a sliding scale.
A popular move for freelancers is to start an S-Corp LLC where you pay yourself a fair wage compared to others in the industry. This money gets taxed hard. Harder personally for you than if you worked for someone else. You can pay yourself dividends though with any extra money your earn as long as it's less than your wage income. This money gets taxed much less.
How you invest your money is also taxed all sorts of different ways.
Note - I'm not a tax professional & the above is just my understanding. Someone who is a professional or has more experience would give better advice hence my original post.
It’s not a crime if they don’t catch you. But ensure that your taxation system does not have rules about transfer pricing to expressly prevent tax avoidance.
The cheaper (with AI and automation) it gets for IRS to chase for transfer pricing violations, the more likely it is to get a fine.
I don't believe it's dysfunctional for this particular reason. There are for sure trade-offs between simplification & trying to optimize for the best outcome. A simpler tax code would be nice but then people on all sides of the political aisle would start saying we should really give X a break for Y reasons and that's how it seems to get complicated.
There is literally a 20% tax break for most small businesses this year in the US.
Healthcare can be cut in half if you are below certain requirements but make a $1 more & you pay the whole bill. This one I agree seems silly. Though it's maybe to simplified & should be more complex with a sliding scale.
A popular move for freelancers is to start an S-Corp LLC where you pay yourself a fair wage compared to others in the industry. This money gets taxed hard. Harder personally for you than if you worked for someone else. You can pay yourself dividends though with any extra money your earn as long as it's less than your wage income. This money gets taxed much less.
How you invest your money is also taxed all sorts of different ways.
Note - I'm not a tax professional & the above is just my understanding. Someone who is a professional or has more experience would give better advice hence my original post.