Huh? How is it not unfair that, for example I can’t deduct rent from my income? A company would be able to do that. What about amortizing the cost of my domicile over 30 years?

The personal exemptions are a sham and do not reflect the reality of high cost of living areas.

> How is it not unfair that, for example I can’t deduct rent from my income?

Tax policy isn't set by moral arguments, it's set by government need for revenue which is then tweaked by political pressure groups.

The reason why you can deduct mortgage interest but not rent has nothing to do with fairness, which is undefined and a massively ambiguous term, but because banks, which are the primary beneficiaries of mortgage subsidies, have a lot more political power in Washington than landlords, who would be the primary beneficiaries of national rent subsidies.

Governments like the US today can borrow money or print it with very few constraints. Taxes are not primarily about raising revenue.

For small, opening (usually developing) economies the matter is different, and they should have more capital controls accordingly.

> Taxes are not primarily about raising revenue

That’s an intriguing comment. Can you explain further?

I suspect the parent is coming at this from the MMT angle: https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory

For states like the USA that print their own currency and enjoy tremendous global demand for their currency, taxes are less about revenue and more about controlling behavior and unemployment outcomes. Some argue that taxes are just a way to force demand for a currency the government has a monopoly on to ensure it always has _some_ value.

(Note: this is a rather polarizing theory and still somewhat young. The US Fed pulled off printing trillions last year and things haven't gone to hell yet do there's something there )

I get a tax rebate for rent. Maybe it depends where you live.

For a house, your net worth hasn't decreased by the cost of the house. A company wouldn't be able to deduct that. They can deduct for assets that depreciate.

A company cannot depreciate land, but they can depreciate the value of the buildings on top of it over a fixed period of time. So in addition to writing off the mortgage as an expense, you can also amortize it since the value of additions (not the land) decreases.

I'm not sure what you mean here. You can't write off a mortgage. You could write off interest, but not the value of the mortgage.

Real estate tends to appreciate in value, especially in cities. The company would have to get unlucky with their real estate to be able to write off a loss. Buildings don't usually depreciate.

They could allow their buildings to fall into a state of disrepair, hoping it would lower their value. But why would they? The can deduct the repairs. It's a legitimate expense.

As a business I can take out a mortgage and give you a rental for the exact same price. The income and “expenses” cancel out, so the profit of your business is zero. Since this rental is an income producing activity the IRS (and other tax bodies) allow you to depreciate (https://www.irs.gov/publications/p946) the value of additions on the land (I.e the building) on a straight line over a 28 year period. The basis of the depreciation is the value of the property, so you divide that over 28 years and can take that away from the income as well. Now I can transfer that cost to you in rent and the profit of my business is still zero. This is a benefit that is generally only available to corporations. Then there is prop 13 which is yet another mess.

I’m not an accountant, but I’ve studied enough of it in University to be dangerous.

It's fair that you don't pay tax when don't make a profit after taking depreciation into account.

Depreciation isn't a cheat code that lets you avoid tax on profit. If you depreciate the building more than its actual market value depreciation, you owe back what you deducted when you sell the building.

Of course, the argument here is that as a natural person I cannot be taxed on a profit basis, nor depreciate the house I live in.

In some countries, true. In the UK about the only things you can deduct are:

1. Pension (up to a maximum amount, and tapered down from 40k to 4k depending on income) 2. Cycle to Work bike 3. Childcare vouchers

There's also some allowance if you're required to purchase things for your job, e.g. a uniform or tools, but vans, cars etc. are out.

Yeah the whole US mortgage interest exemption is a special US thing, not a natural tax exemption available worldwide

Here in NZ there are NO tax exemptions for normal humans (well there is one single one for low income families with small children) - it means that our taxes are incredibly easy to file - if you have one employer you probably don't need to file at all, if you want to it's 2 pages on a web form, if you don't file and the IRD owes you money they'll probably pop it in your bank for you.

Oh, and our high marginal tax rates are ~10% lower than I was paying in California, and that includes free public healthcare