If individuals were treated like corporations, I could set up an affiliate called “Catherine Rampell Bermuda,” have it pay my college tuition and then declare that the affiliate owns the resulting degree. I could then tell the IRS that everything I earn above the average high school grad’s wage should be recorded as income in Bermuda, since it’s all derived from a Bermuda-based asset. Until I decide to repatriate those diploma-derived earnings, I’ve built myself a tax-free IRA.
At the Washington Post, Catherine Rampell is like, Well if corporations are people, then people should be corporations! She talks to Tax Experts who list the many potential benefits we could earn by reporting our taxes as a corporate entity rather than an unfortunate old human being. No taxes on international income! Deduct sales tax! Deduct healthcare spending!
This sounds great although I don’t appreciate being made to think about taxes outside of tax time.
Meanwhile, Rebecca J. Rosen at the Atlantic retells an “extremely literal instance of corporate personhood” wherein a 1960’s IBM employee named Susan Elliott had her husband incorporate her so that she could keep working when she was pregnant. Amazing:
Many companies in those days were skittish about the liability of having a pregnant woman in the office. “IBM’s policy was to send you home at six months because you were so fragile. You couldn’t possibly work for that last three months,” she says sarcastically. “That wasn’t acceptable to me because, one, I loved what I was doing, but, two, Howard was recently out of law school and we needed me to work.”
Soon Elliott found another place that wanted to hire her, First National Bank in St. Louis. “They wanted my technical capabilities,” she says. “Having worked for those eight years for IBM, I was way out on the leading edge.” But First National Bank had the same policy—no work for the third trimester.
Susan and Howard mulled things over and came up with a workaround: “Howard, with his new law degree, incorporated me.”
It was a tidy little solution: The bank could avoid directly hiring Elliott, protecting itself from the risk, and instead subcontract the work to Systems Service Enterprises Inc., of which Susan was the sole employee. (SSE are Elliott’s initials.)
I think we have finally found the way to Have It All. Or all of the tax deductions. INCORPORATE YOURSELF.
Photo via rutlo