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I don't know about you guys and your local tax laws, but I can deduct the costs of earning my income from my taxable income.
Transportation to the job, further education for the job, (if I had any) the costs of having my kids looked after while I work, that sort of thing.
Fundamentally very similar to how the business deducts operating cost from revenue, before paying taxes on profit.
I'd argue the necessary upkeep to remain alive and functional as an employee should be included as a cost of earning your income. Where I am you definitely can't deduct housing, food or transportation costs. Limited deductions for child related stuff.
Transportation to the job,
Normal commuting expenses are not deductible. You can only deduct transportation expenses to work locations other than your usual workplace, and then only that part of your expenses that exceeds your normal commute.
You can itemize other "costs of earning [your] income", but for most people, the standard deduction is substantially greater.
This is the case in most jurisdictions but the line between expenses that are incurred in the course of earning your income and those which are not will vary to some extent.
For example, the cost of driving to and from work is generally not deductable, but if you need to travel to some third location then that is generally deductable.
It doesn't really matter exactly where the line between deductable and non-deductable is, because the same rules are applied to everyone in the jurisdiction. For example, if you decide that everyone can claim the cost of driving to work, then the tax rates need to be higher to ensure sufficient tax revenue for the government.
That said, you're correct that the difference between a corporation and a person is the extent to which their activities are income producing. Everything a company does is in the pursuit of profit, so all expenses are deductable against income. In fact tax law prohibits company's spending money for other purposes.
Hmm... Sounds like we should do some tax magic to file our cost of living as operating expense in some way, we can't earn those income if we are not alive after all.
You can't deduct personal expenses, but you absolutely should be operating a side business with its own deductible expenses. That side hustle will probably be operating at a loss, and that loss will offset your W2 employment income.
I totally get what you're saying... but to be fair if you did allow people to deduct all the money they spent in a year from their income, it would specifically encourage a lot of people to spend every single dollar they earned just to avoid the taxes.
They'd be like "hang on, if I spend $3000 a month on rent I get taxed on the $1000 I have left over? What if I move to a place that costs $4000 a month? No taxes? That's what I've got to do then!"
Is that sensible? No. The tax they'd pay on the $1000 is way less than the extra $1000 they're planning on spending to avoid it, but people seem to have a real aversion to a little tax, and many would feel they "got something" for the extra money they spent on groceries or restaurants or rent, compared to the taxes which are simply taken from them.
I'm not saying it couldn't work, I'm not saying there aren't better ways to do it, and I'm definitely not saying there aren't weird cliffs in programs like this that lock people into poverty. But I'd be worried that people who are already wrong about graduated tax brackets, for example, would make a lot dumber choices if they felt they could spend $40 on fancier bread to avoid "$40 of taxes"