Here's an interesting legal tax question to ponder:
Typically businesses can deduct costs of running a business from their gross income. This includes situations where business personnel take clients or potential buyers out to lunch or dinner.*
In 1986, with the advent of the current tax system, the rule was changed to allow deductions of only 50% of the cost of food and beverages. Why?
Allowing tax deductions essentially subsidizes business costs, which makes sense so that gross income is equivalent to normal wages. However, allowing (more often than not wealthy) folks to spend time in nice restaurants and then deduct the total from the company's gross income was considered unfair since normal personnel had to bring in lunch or go to cafeterias/vending machines. Thus the 50% limit was to prevent a social inequality among workers and still allow a reasonable deduction schematic.
My question is, for a Christian ethical system, is it right to deduct the 50%? I suppose this addresses more than this narrow tax question.
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Source: [*] Internal Revenue Code Section 274(n)(1).
Typically businesses can deduct costs of running a business from their gross income. This includes situations where business personnel take clients or potential buyers out to lunch or dinner.*
In 1986, with the advent of the current tax system, the rule was changed to allow deductions of only 50% of the cost of food and beverages. Why?
Allowing tax deductions essentially subsidizes business costs, which makes sense so that gross income is equivalent to normal wages. However, allowing (more often than not wealthy) folks to spend time in nice restaurants and then deduct the total from the company's gross income was considered unfair since normal personnel had to bring in lunch or go to cafeterias/vending machines. Thus the 50% limit was to prevent a social inequality among workers and still allow a reasonable deduction schematic.
My question is, for a Christian ethical system, is it right to deduct the 50%? I suppose this addresses more than this narrow tax question.
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Source: [*] Internal Revenue Code Section 274(n)(1).
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4 comments:
Jerms,
I think that the question presupposes a basic environment in which Christian ethics have not had any impact. In other words, for the Christian community, the question probably wouldn't be asked, since Christians would (hopefully) already be giving everything they could to meet the needs of those around them.
However, given that the Church isn't writing tax law, Christians need to be speaking on behalf of the voiceless. If policies are institutionalizing social inequality, then how could Christians stand for them? How could a Christian answer "No" to your question. I guess I'm sincerely curious about that question--the answer seems pretty straight forward to me.
Matt, that's an interesting point. As I understand it, you seem to be saying that our focus should be on direct aid instead of thoroughly indirect methods of allocating money.
I think that my focus however, is on the allocation itself. If our focus is to give to those without a voice, then we should be doing our utmost to achieve this goal.
But this brings me to my point. With this deduction, we essentially have two choices. One, we can choose to not deduct the expense in the spirit of upholding the social policy as stated in the post. But then we have a higher tax liability, hence less net income in the end to tithe.
Our second option is to deduct, reduce our tax liability, but then have more net income, which could result in more direct giving. Where the sacrifice line is I think is an interesting focus. Plausible arguments exist either way.
Maybe they do, but as you mentioned those whom this policy most impacts are the ones who are able to afford sitting around in swanky restaurants all day. I guess I'm a little unwilling to trust "the rich" as an abstract body to give more when they have more money. Individual wealthy people might indeed give more if they have more, but our society seems to encourage them not to give more, but to hoard more. Personally, then, I don't feel too bad about eliminating this deduction.
That is an excellent point, and I must say I am in agreement with you, I had a similar hesitation when first thought about the deduction. I think that line-drawing such as this is a necessary implement in this day and age, and that we should avoid the temptation to simply live out the practicalities for practicality's sake.
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