(1) As promised here is my response to the contention of Kevin of NO DEBT PLAN that one reason we will never have a flat federal income tax system is because it would put accountants and tax professionals out of work -
As a long-time tax preparer I am not worried about how a simple “flat tax” would affect the tax profession. I do not believe that such a tax system would put me out of business, or even reduce my net income. I actually welcome such a tax system.
If I were to spend each day during the tax season preparing only 1040A forms, I guarantee that I would bill more fees, spend less money, reduce my potential liability, and have less agita to deal with both during and after tax-time. While I obviously charge a higher fee for more complicated returns, I make less profit per hour on these returns. I honestly believe that a true 1040-SIMPLE would increase both my efficiency and my bottom line.
In its report of a few years back, the President’s Advisory Panel on Federal Tax Reform (whatever became of them) often mentioned that complicated rules force taxpayers to use paid preparers, and the simplification they proposed would permit more taxpayers to be able to prepare their own returns.
While a flat tax system would make a tax return easier to prepare, I do not see my clients leaving me en mass to do their own returns. A majority of my current clients are fully capable of preparing their own tax returns under current law. They come to me because they do not want to be bothered with the task of doing it themselves. Because my fees are reasonable it is easier, and more cost and time effective, to have me do it. Plus they want to be sure they do not miss anything.
While a flat tax system would include a great deal of simplification, there would still remain enough complexity in certain areas of the tax code to keep us busy. I expect we would still need to prepare some kind of Schedule C for business income, Schedule D for capital gains and losses, and Schedule E for rental and pass-through income. Even though income is taxed at a flat rate, one still would have to calculate and report the income.
Even if the current Tax Code is greatly simplified, it is a proven fact that any change to the Code will increase business.
The only sectors of the tax preparation community whose income could possibly be affected by this simplification are CPAs with an extensive individual tax practice (but businesses would always need accounting services for a variety of internal and external non-tax purposes), and commercial preparation firms like Henry and Richard (although they, too, would profit as tax preparation became even more “assembly line”), whose fees in most cases are extremely excessive. Also with fewer things to audit tax professionals who specialize in representation would also need to adjust their focus. However I believe the average tax preparer will not be hurt, and will probably be helped, if a simple flat tax becomes the law.
I am curious to hear my fellow tax-preparing bloggers thinking on this topic.
(2) Also as promised I have dug up my old post about cell phones, which originally appeared under the title FINE WHINE –
“When visiting my “mail drop” the other day – Global Mail near Journal Square in Jersey City (also a client) – I noticed a sign at the counter:
“PLEASE – NO CELL PHONE CONVERSATIONS WHILE AT THE COUNTER – THANK YOU”
Kudos to my client! This sign should be prominently hung in every single business establishment and Post Office in America.
I am constantly amazed that while waiting on line at the bank or Post Office the person who is at the window currently being served is carrying on a conversation on a cell phone. What idiots!
As I have said before, in the “good old days” when you heard someone talking to himself/herself in the street it was because he/she was “not all there”. Nowadays, it is still because the person is “not all there”, only now he/she is talking on a cell phone.
Whenever I ride a public bus or train I am forced to listen to one side of about half a dozen phone conversations, none of which are particularly interesting.
I saw an excellent bumper sticker a while ago which read “GUNS DON’T KILL PEOPLE. IDIOTS TALKING ON CELL PHONES WHILE DRIVING KILL PEOPLE!” That is not a joke - I was almost run over crossing the street near my home when a person talking on a cell phone ran the red light.
Every single theatrical production, lecture or continuing education seminar must now be prefaced with the instruction “Please turn off all cell phones.” There was never an announcement “Please do not stab the person next to you with a knife”. Only a person who carries a cell phone everywhere would be stupid enough to have to be told to turn it off in such a situation.
(1) So that a babysitter is able to contact you while you are out to dinner or at a movie to let you know of an emergency at home.
(2) So you can contact 9-1-1, the auto club, and/or your family if your car breaks down or you are involved in an accident (or to contact 9-1-1 for any other kind of emergency).
(3) So you can call a client, or a friend or family member, if you are on the road and running late for a business or social appointment, or to ask for directions if you are lost.
I dare anyone to name another legitimate reason.
I had a cell phone briefly several years ago, for reasons number (2) and (3). I kept it in my car and it was stolen. I never replaced it – and have never missed it.”