You Can’t Buy a Car on Sunday
One of our businesses is looking to set up shop in India, so I had to pass along this article about the country’s different tax rates on popcorn. Whether it’s sweet or salty, loose or packaged, sold independently or bundled with a movie ticket, the Indian government views each instance as warranting a different tax rate. That’s obviously a compliance nightmare and is a funny little indicator of just how difficult it can be to do business in the world’s most populous nation.
Moreover, the article resonated with the folks I sent it to. That’s because as it’s currently structured, and because of India’s capital controls and tax treaty with the United States, there would be no way for our little business to actually get paid by Indian customers without filing a whole heckuvalot of paper work. Chalk that up to rules and regulations usually creating more problems than they solve. (Or if you know of a workaround, let me know!)
That said, it will always make sense to some politician or bureaucrat somewhere that sweet popcorn should be taxed at a higher rate than savory for the same reason you can’t buy a car on Sunday in Missouri, but you can buy a boat.
And here we go again with this “no tax on tips” ridiculousness that was perhaps the only thing both sides agreed on during the recent presidential election. This idea, to exempt service workers from having to pay income tax on tipped wages, is considered “terrible policy” with “no real economic merit” by economists (but what do they know?), would be an administrative and compliance nightmare, and makes no sense. Why should a barista and a bricklayer that make the same amount of money have wildly different effective tax rates?
Or, perhaps more relevant to small businesses with employees, who and who doesn’t qualify for overtime pay? (In so many things, just pick a standard and stick to it.)
Yet here we are.
Look, some policies have merit and others don’t. I get that. And I also understand that it feels like the right thing to do to try to make bad policies better. But change creates work and compliance is a headache so before these folks started tinkering on the margins, I wish they’d consider if it’s worth it.
– Tim