On Sun, 16 Dec 2007 03:39:14 GMT, (Doug Miller)
wrote:

In article , Dave Hall wrote:

So I assume in this world there would be no deduction for wages paid
to employees, no deduction for the purchase price of items you then
sell, no deduction for your factory's utility costs, etc., etc. So the
grocery store that sells $1,000,000 worth of groceries would pay the
same tax as the jewelry stoe that sells $1,000,000 worth of crap, even
though the grocery store had $950,000 in costs while the jeweler had
$500,000 in costs. HMMM, seems wrong.

No reason at all to think that. You seem to be misundertanding what is meant
by a tax deduction -- which is something subtracted from adjusted gross income
to arrive at taxable income. In your example above, the grocery store's
adjusted gross income is $50K while the jewelry store's is $500K. What's the
problem?

So tell me, what goes in to computing "adjusted gross income"? It is
Gross income minus certain semi-specified DEDUCTIONS. Clearly many
will agree that cost of goods sold is a valid deduction, what about
labor? Yes? Then what about sales labor? Yes? Then what about payment
to sales people for when they take potential customers to strip
joints? Nevr mind... back to costs of goods sold. I assume we get to
deduct materials put into production? What about utilities to run the
shop equipment? What about shop overhead? What about say the truck the
foreman uses to go from location to location? The list of things to
ask whether they are "valid" deductions is endless and once you allow
a deduction you are back on the track of lobbyists paying off congress
persons to allow their favorite "deduction".