▲ | nayuki 13 hours ago | |
True. If you wanted to increase GDP and taxation in a nation, then: People should not cook their own food; they must pay someone to cook it in a legally documented transaction with sales taxes and income taxes. People should not take care of their own children; they must outsource it to a legitimately run daycare. People should not live in a house that they own; they must pay rent to a landlord. (People can still own homes but must rent it out to someone else for money; you just cannot occupy a home that you own.) Actually, the last point gets pretty interesting. Let's say that you and your neighbor live in two houses with identical features. If you just swapped houses with each other and charged each other rent and legally paid all required sales/income taxes, then both of you would have less money at the end of the year than if you just lived in your own house. Yet physically speaking, nothing is different - you both still derive the same value from living in a house. While that situation sounds stupid and contrived, it is very similar to something that can happen in real life. You can own a home in city A (let's say it's a condo apartment), but suddenly you need to leave and move to city B due to a better job opportunity. If you rent out your home in city A, you need to pay income taxes, so that will not completely offset your cost to rent a home to live in city B. And the rent you paid out in city B generally is not tax-deductible. It's like a one-way transaction where the government always wins. See also: https://en.wikipedia.org/wiki/Imputed_rent , https://money.stackexchange.com/questions/118832/is-it-tax-i... |