Why are business expenses deductible from income, but someone’s basic living expenses aren’t deductible from personal income?
In: Economics
Business expenses are the cost of earning income, so they mean you actually have less income than your gross revenue. If you had to spend $100 on office supplies to start your business, your first $100 sale only goes to pay for that, it’s not taxed because you haven’t made any money yet. You needed to spend that money or you wouldn’t be able to get any income at all.
When you take your income from your business and spend it on food, rent, hookers, crack, whatever, that’s not related to your income earning activities. That’s a personal consumption decision that you make once the income generating portion of your life is completed, so it’s not relevant to your income situation.
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