In an absorbing article in The Washington Post, Catherine Rampell speculates: Corporations are people. So what if people were corporations? It's an intriguing concept and certainly worthy of the time and effort Rampell devoted to researching it.
Perhaps, as she suggests, we've been looking at this the wrong way. We're already aware that people can incorporate their names, therefore why should you not identify legally as a corporation? Home would be your “corporation headquarters”; your skills, talents and qualifications would be your “intangible property”.
There'd certainly be enormous tax benefits; corporations can claim multiple rights and privileges exclusive to themselves, benefits unattainable by mere biological beings – until now.
The first step is to incorporate yourself. Irrespective of your home address, you can choose any jurisdiction in which to do this so look for the one with the most favorable corporate governance laws. Delaware comes highly recommended by Boston College Law Professor, Kent Greenfield, who points out that the state's General Corporation Law is widely regarded as the most advanced (ie, flexible and least expensive) business formation statute in the nation. This explains why Delaware has more businesses (over one million) than people (approximately 926,000).
Now for the tax benefits:
Corporations are taxed on profits. Therefore all expenses incurred in keeping your corporeal corporation operating – energy input (food and beverages), every cent spent on healthcare, transportation, communications, etc – are deducted from your revenue (income) in order to arrive at the profit. That's a huge saving right there!
And there's so much more. As Rampell discovers:
Businesses... can transfer their “intangible” property — things like patents or trademarks — to holding companies in tax havens. That means a company such as Apple could assign ownership of its patents to a subsidiary in Bermuda, and any profits resulting from those patents would get taxed in Bermuda only. Unless and until those profits were repatriated to the States, Uncle Sam wouldn't get a cut.
If you think about it, humans have valuable intangible assets, too. Take, for instance, a college degree.
According to Martin Sullivan, the chief economist at Tax Analysts, 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.
Now that your home is your corporation headquarters, you can deduct the full interest on your mortgage payments. This includes any other properties you own or plan to buy – a holiday retreat for example – which instantly become “branch offices”.
According to UCLA Law Professor, Adam Winkler, if you live in a state which doesn't recognize marriage for you and your partner, you can establish a merger instead with all the corporate benefits. The ceremony would be worded somewhat differently but the celebration afterwards can be bigger and better because, hey, it's a tax deduction!
Rampell concludes her article with additional benefits for those of a criminal bent – the penalties in the penal code are far more lenient with respect to corporations than they are to biological persons. You can avoid jail which is reassuring. It seems the worse you can suffer is death by revocation of your charter. You can live with that.
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