If corporations are recognized as people in the eyes of the law and thus can enjoy certain constitutional rights, can people be legally identified as businesses and thus enjoy certain tax exemptions and benefits? It’s an interesting question that fights the fire of corporate America with the fire of America’s humanity.
Think of it like this. Our work paychecks are our revenue, and our business is a self-investment capitalist venture that generates revenue by providing services for our clients (e.g. employers and the companies we work for). We have expenses that are similar to business expenses, such as rent, living expenses (similar to a business’s upkeep expenses), utility expenses, and travel expenses. These expenses add up and for many people, they consume more than half of a year’s salary. For many other people, they consume the entire year’s salary. Still, we have to pay taxes on our full salaries despite the financial burdens our expenses place on us. This is something most businesses are not required to do, as they can use their expenses to offset their taxable income and reduce or eliminate most of their taxes in order to protect their profits. While people can do the same thing by claiming deductions, there are a lot of restrictions on the things we can deduct and how much we can deduct off our incomes for each item. Because people aren’t able to take advantage of their expenses in the way businesses and corporations can (unless they are sole proprietors or their own businesses), many people don’t turn much of a profit at the end of the year as most of their wages go to paying for their living expenses.
Now, by asking if people can be identified as their own businesses I don’t necessarily mean sole proprietorship, where self-employed individuals claim themselves as their own businesses. Though in many cases individuals would be classified as sole proprietors and would be eligible for certain advantages, such as offsetting their incomes with their expenses and being taxed less by the IRS or not taxed at all if their expenses are greater than their incomes. Which of course is a very enticing advantage.
Rather, what I am asking is can people be legally identified as businesses whether they are employed, self-employed, or unemployed? This way people could be able to form business partnerships with other individuals such as friends, family, and spouses — or even form partnerships with their employers — in order to receive certain tax advantages. Additionally, they could report net losses if unemployed or making low wages in order to avoid paying income tax. They could spend their time doing charity work and philanthropy and count themselves as nonprofit organizations, which come with their own tax breaks, advantages, and insurance premiums. Individuals could also be identified as Limited Liability Companies (LLC) and be protected from some or all of the liability of their actions and debts, and then decide whether they want to be taxed as sole proprietors, partnerships, or corporations instead of taxed as individuals — all of which come with their own sets of advantages and disadvantages.
For instance, with S corporations the business itself does not have to pay federal income tax, but the shareholders do after reporting the corporation’s income or loss on their individual tax returns (shareholders in the case of people being their own businesses would be individuals and their business partners, financiers, or spouse). So before paying their taxes, S corporations subtract their expenses from their revenue and are taxed on the profits that are left afterwards.
This would be the equivalent of you making $25,000 in one year but spending $10,000 on rent (a living expense), $5,000 on food (another living expense), $2,000 on gas (yet another expense), and $4,000 on other expenses (such as car repairs, business supplies, internet and phone bills), leaving you with only $4,000 in income that year as $21,000 of your revenue was spent on expenses. Which in turn means only $4,000 of the $25,000 you made would be taxable income. And since your income is so low you wouldn’t have to pay as much federal income tax and might even qualify for certain tax breaks. This benefit also applies to sole proprietors, however they have unlimited liability for their debts and can be audited by the IRS or sued by creditors for not making money any given year. On the other hand, as a LLC an individual wouldn’t be as liable or responsible for his or her debts, which may even include credit card and student loan debt depending on the individual’s situation. While you may not be doing any work at your place of residence and your food may not be in the form of business lunches, you do need to pay for rent and food in order to survive and to continue making money (or to keep your money-making “business” afloat, if you will). You also need to pay credit card bills to keep your credit in good standing and keep your business a reputable one. The same applies to school loans, which are technically business investments in yourself that you plan on seeing returns from in the future. These are all expenses that need to be paid for you — an individual business — to continue operating smoothly and making money. It’s only fair that these expenses offset our revenues before our income is taxed, rather than taxing us on our salaries without taking the majority of our necessary expenses into consideration, while handing us deductions with limitations attached to them that hardly do anything to benefit us.
The reason I ask is because corporations are allowed to assume personhood in order to engage in lawsuits, they are protected by the Fourteenth Amendment and guaranteed certain constitutional rights (freedom of speech and the right to petition, for example), they can enter contracts, they can own property, and they are legally responsible for themselves as people instead of employers, shareholders, and managers being responsible for a corporation and the corporation’s debts. Because of this, corporations can act independently of their owners since they are classified as their own people, which means the owners aren’t necessarily responsible for the actions of their corporations in a legal sense. It’s a nice little loophole that reduces the accountability of CEOs and allows corporations to donate to political campaigns because their contributions are considered “freedom of speech” that don’t necessarily reflect the views and opinions of the CEOs and owners: the corporation made the donation using its own, God-given free will.
Due to the laws of the United States, corporations are legally treated as people unless otherwise noted by a judge. As stated in 1 U.S.C. §1 (United States Code):
In determining the meaning of any Act of Congress, unless the context indicates otherwise– the words “person” and “whoever” include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals. –From Wikipedia
So if corporations are recognized as people and are protected by constitutional rights, can people be recognized as businesses and receive the tax benefits that come with it (along with being eligible for small-business stimulus packages)? This is already possible and happens frequently in the cases of sole proprietors as I mentioned earlier, but I’m talking about people claiming themselves as businesses even if they aren’t self-employed or if they work for a company. Work is business regardless of what kind of work it is. Employee and employer are doing business together as time and services are being exchanged for pay. Since we own ourselves and we are trying to make money, we are technically our own businesses already and should qualify for at least some of these 31 small business tax deductions. But it seems as if the tax laws do not recognize us as our own businesses or give us the same benefits as businesses receive.
If we were able to use all of our expenses to offset our incomes, then we would be taxed less (or not at all) and our finances would improve since we could essentially write off rent, gas, furniture, and groceries as “office operation expenses,” “equipment, furniture, and supplies expenses,” living expenses, and other business expenses. The collective quality of life in America would increase and people would have more money to make purchases, take out loans, and otherwise stimulate the economy. Instead of punishing the people who make America happen everyday, we should be doing all we can to support the people and make it possible for them to live and spend freely: for the sake of liberty and a stable economy. After all, the Preamble of the U.S. Constitution refers to “We the people,” not “We the corporations.” Perhaps it is time to stop investing so much of our faith and favor in the corporations and instead invest more in humanity.
Feel free to share your thoughts on this idea in the comments section below!