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A simple system can’t answer questions like...
Why income should go to one state versus another? Why one state factors their apportionment one way vs another....do you favor companies inside the state or outside? Do you favor industries that have more payroll in your state or more sales? Do you want R&d facilities or manufacturering sites? How to handle a stock sale versus an asset sale....how do you handle transfer pricing? How do you handle differences between gaap accountIng and tax accounting....what about all of the different international accounting systems.....how do you handle deferred tax assets and liabilities...how must companies combine groups in your state? How will you handle federal taxes flowing down to your state? How do you account for the numerous kinds of business structures in taxation who have different advantages and disadvantages? How do you account for different buckets of income? How would you treat people who pollute or abandon structures and property? Do you incentivize capital investment? Do you incentivize hiring in poorer areas? How do you treat companies with different debt and equity structures? What is defined as compensation? Do you reward companies for creating new jobs that pay higher than the areas average? What is manufacturing? Where does it begin or end? Is farming an important industry? We could go on all day. It can’t be simplified.
The economy is complex. There’s no way to simplify the tax code that goes across local, state, and national boundaries. Every state has a different economy. Cities within those states have different economies...nations are different with different ways of conducting different businesses in different currencies....they have entirely different spending needs for defense or education....they have different systems entirely of raising revenue. The companies have different capital structures....they operate within different central bank cycles...
The complexity of the rules are in place generally to stop abuse and to shape behavior. This web is needed to deal with the intelligent who would find ways to avoid a simple system. A simple system doesn’t function. Even a complex system is constantly evolving to catch up to or defeat attempts to avoid it. A simple, inflexible one stands no chance.
None of this has anything to do with the original post, though.
The premise which is that somehow lower income people are being screwed by not having expensive CPAs to manage their oh so complex 1040 EZ form for their ....what? Under >$50K income (and I'm being generous there)
Nobody is claiming that ignorance of the law is pleaded to escape liability.
The financial planner / wealth manager who referred to two tax systems says that the informed use the tax code to reduce their liability, i.e. the uninformed pay more taxes than they need pay.
None of this has anything to do with the original post, though.
The premise which is that somehow lower income people are being screwed by not having expensive CPAs to manage their oh so complex 1040 EZ form for their ....what? Under >$50K income (and I'm being generous there)
You're talking about businesses.
Well, I THINK that was the premise. Hard to tell.
Lower income people don't pay income tax anyway. Problem fixed.
The lovely thing about the divide between the uninformed and the informed is that any time one of the uninformed becomes tired of being uninformed, all he has to do is to put in a little bit of effort and he can move himself into the informed camp.
In many areas of information, a few minutes of googling will move the uninformed into the informed group. No more than two hours of googling will move the uninformed about how to pay the lowest amount of taxes to the informed group.
All of which is free, baring a couple of hours of time.
You don't even have to google, OP, I'll give you the information for free, no effort on your part: when you sell your magazines, you can take that income tax free simply by filling out the correct IRS forms when you file your taxes.
To google something you have to ask the right question which may be quite precise regarding tax law. To do this proactively in order to impact your future tax situation is even more difficult. Of course if you already have the money, you pay a tax professional to ferret all this out for you.
Quote:
Originally Posted by Thatsright19
It’s actually even simpler than that. With how simple it’s to prepare a 1040 for most of the population and the software that exists, you don’t even need to understand anything about taxes to complete the return with a pretty reasonable assurance that it’s accurate. You don’t need to understand the law or any of the forms.
If you’re smart enough to answer yes or no questions and hit the “next” box, you’re flying high.
Individual tax COMPLIANCE is basically a commodity.
Filling out a 1040 without mistakes is far different than completing it to your own best advantage.
A simple system can’t answer questions like...
Why income should go to one state versus another? Why one state factors their apportionment one way vs another....do you favor companies inside the state or outside? Do you favor industries that have more payroll in your state or more sales? Do you want R&d facilities or manufacturering sites? How to handle a stock sale versus an asset sale....how do you handle transfer pricing? How do you handle differences between gaap accountIng and tax accounting....what about all of the different international accounting systems.....how do you handle deferred tax assets and liabilities...how must companies combine groups in your state? How will you handle federal taxes flowing down to your state? How do you account for the numerous kinds of business structures in taxation who have different advantages and disadvantages? How do you account for different buckets of income? How would you treat people who pollute or abandon structures and property? Do you incentivize capital investment? Do you incentivize hiring in poorer areas? How do you treat companies with different debt and equity structures? What is defined as compensation? Do you reward companies for creating new jobs that pay higher than the areas average? What is manufacturing? Where does it begin or end? Is farming an important industry? We could go on all day. It can’t be simplified.
The economy is complex. There’s no way to simplify the tax code that goes across local, state, and national boundaries. Every state has a different economy. Cities within those states have different economies...nations are different with different ways of conducting different businesses in different currencies....they have entirely different spending needs for defense or education....they have different systems entirely of raising revenue. The companies have different capital structures....they operate within different central bank cycles...
The complexity of the rules are in place generally to stop abuse and to shape behavior. This web is needed to deal with the intelligent who would find ways to avoid a simple system. A simple system doesn’t function. Even a complex system is constantly evolving to catch up to or defeat attempts to avoid it. A simple, inflexible one stands no chance.
Who cares how you define compensation? That's between the hirer and the hiree. Why should companies be rewarded beyond their profits? Can law define what an important industry is? I know: one that you miss when it's gone.
The law is for people. Law that can't be known, let alone understood, can't do any good. Even the IRS doesn't understand itself. 1/3 of questions asked it are answered wrong.
States are different animals and NY is an animal to itself. GAAP has handled deferrals and accruals fine. Why can't GAAP and the IRS settle on a common code? Answer: it would unemploy too many well-off lawyers and CPA's. And would take away one of the politicians' sandboxes.
For individuals, one 8" x 11" should be sufficient.
Behavior can't be shaped better than by the Books of Law.
Filling out a 1040 without mistakes is far different than completing it to your own best advantage.
Compliance is merely filling in what already happened. Tax planning will give you the advantages. There’s very little “advantage” to be had at the point when little billy goes to enter his simple tax return with his median salary.
The vast majority of individual taxpayers have a return that’s essentially a commodity. See the ridiculous ads this time of year for the super low end tax providers. It doesn’t matter which provider you do your compliance with or if you do it yourself....it’s the same story. The same answer.
Who cares how you define compensation? That's between the hirer and the hiree. Why should companies be rewarded beyond their profits? Can law define what an important industry is? I know: one that you miss when it's gone.
The law is for people. Law that can't be known, let alone understood, can't do any good. Even the IRS doesn't understand itself. 1/3 of questions asked it are answered wrong.
States are different animals and NY is an animal to itself. GAAP has handled deferrals and accruals fine. Why can't GAAP and the IRS settle on a common code? Answer: it would unemploy too many well-off lawyers and CPA's. And would take away one of the politicians' sandboxes.
For individuals, one 8" x 11" should be sufficient.
Behavior can't be shaped better than by the Books of Law.
My gosh. It’s like nails on a chalkboard listening to people like you talk about the tax law.
Akin to listening to a team of minimum wage workers talk to you about how simple this heart surgery they’re about to preform on you will be is as you drift away from the anesthesia.
None of this has anything to do with the original post, though.
The premise which is that somehow lower income people are being screwed by not having expensive CPAs to manage their oh so complex 1040 EZ form for their ....what? Under >$50K income (and I'm being generous there)
You're talking about businesses.
Well, I THINK that was the premise. Hard to tell.
As I said a few posts up, no a cpa won’t get you more money out of a simple commodity style return.
You can’t separate business tax from individual tax. Many business types flow down to individuals. Many people own investments in business. It’s why every tax reform discussion always centered around corporate tax reform occurring before individual tax reform. Additionally, the tax rates on the business side directly affect taxes on the individual side. Case in point on the latest tax reform was everytime the politicians wanted to give more tax breaks to the individuals, they ratcheted up the toll charge percentage on cash pools and accumulated earnings and profit.
Also the op never actually specified individuals. He said there’s two systems for the informed and uninformed. Business can fall into those same categories, and in fact there’s much higher stakes for them not to be ignorant since in many cases there’s a fiduciary duty to be in the know tax wise and there’s much more value to be created in tax planning and a good tax department or cpa vs a bad one.
Last edited by Thatsright19; 02-12-2018 at 02:36 PM..
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