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Posted on 4/8/15 at 9:45 am to Jabstep
quote:
Business income would be determined by the following formula: Sales – cost of goods sold – wages – capital investments. As you’ll note, depreciation would become a thing of the past, because businesses would now be entitled to deduct the full cost of any asset purchases.
What's a sale? Is a sale taxable this year or next year?
What's a cost of goods sold expense vs a non cost of good sold expense?
Wages - who is an employee? Are payments made to an independent contractor wages?
Capital Investments - wow, ok, what is a capital investment vs a repair? What is a capital investment vs a supply?
See... tons of wiggle room here. Tax CPAs do all their work in the wiggle room.
Posted on 4/8/15 at 9:58 am to RunningBlake
That's the FAIR Tax Act, not the flat tax. Rand Paul has endorsed both in the past, but none of the other candidates endorse the FAIR Tax Act.
Posted on 4/8/15 at 9:59 am to LSUFanHouston
Makes sense. I agree that the individual side would be impacted more so than the entity side of things. Just find the whole thing interesting. I tend to agree with you though, the code carves out deductions for special interests = campaign contributions. I don't see them letting go of that power.
Posted on 4/8/15 at 10:01 am to Jabstep
You still have to define what exactly is subject to tax, and determine how to measure, or account for, what you are taxing. How do you tax the sale of something you manufacture? On the sales price, or on the sales price less the cost to manufacture? How do you determine the cost to manufacture? Do you use cash basis or accrual basis accounting?
A flat tax would reduce, but not eliminate, CPAs and tax attorneys value to taxpayers. I'd be willing to bet more people would turn to accountants and lawyers to file their initial returns under the flat tax than currently. And they would certainly use professionals leading up to the conversion to figure out how to minimize their total tax over the transition period.
All a flat tax would do is eliminate some tax planning to manage marginal tax rates. It wouldn't change the process of determining income subject to tax.
A flat tax would reduce, but not eliminate, CPAs and tax attorneys value to taxpayers. I'd be willing to bet more people would turn to accountants and lawyers to file their initial returns under the flat tax than currently. And they would certainly use professionals leading up to the conversion to figure out how to minimize their total tax over the transition period.
All a flat tax would do is eliminate some tax planning to manage marginal tax rates. It wouldn't change the process of determining income subject to tax.
Posted on 4/8/15 at 10:22 am to Poodlebrain
As always, solid advice and thought process poodle. Appreciate the input. You guys made me feel a little better about what would happen in the rare chance that this actually happens.
Posted on 4/8/15 at 4:12 pm to Jabstep
what kind of effect would this have on non profits? CCA, Churches, charities? Would they see a significant decrease in donations/purchases if these are no longer considered "tax deductible"?
Posted on 4/8/15 at 4:27 pm to Helmethead
quote:I think you would see a significant decline in annual donations, but a corresponding increase in testamentary donations.
Would they see a significant decrease in donations/purchases if these are no longer considered "tax deductible"?
Posted on 4/8/15 at 5:15 pm to Helmethead
I've read proposals that still allow for mortgage interest and charitable deductions which is good because there is an outflow of cash that contributes to other businesses associated with those deductions.
I personally believe the tax deduction is a major reason people give. if it were to go away, it could mean major trouble for 501c3s.
I personally believe the tax deduction is a major reason people give. if it were to go away, it could mean major trouble for 501c3s.
This post was edited on 4/8/15 at 5:15 pm
Posted on 4/8/15 at 5:19 pm to Jabstep
Who here is a CPA that does absolutely nothing with taxes yet constantly gets tax questions from friends and family and is assumed to be very busy until April 15? I don't know how many times I have explained to people that while I am a CPA, I had one tax class ever and have not had anything to do with taxes since then. Yet like clock work, I get those tax questions every year.
For that reason alone I would support the flat tax.
For that reason alone I would support the flat tax.
Posted on 4/8/15 at 5:21 pm to rpg37
quote:
Since they spend the majority of their income on extraneous items, they would be taxed at a higher rate than others since middle- and upper-class do not spend as much of their income percentage wise.
Maybe they'll learn to live within their means and not buy shite they can't afford.
Posted on 4/8/15 at 6:51 pm to tylercsbn9
quote:
Maybe they'll learn to live within their means and not buy shite they can't afford
Don't be a ducking moron. If you are suggesting that people should buy only things for sustenance and nothing else you are being absurd
The difference is that buying your kid say a bike for someone making 50k/yr is a higher % of income than for someone 200k/yr.
Posted on 4/9/15 at 7:49 am to GenesChin
quote:Don't you think the person earning 200K/yr is more deserving to buy a bike for his kid than the person making 50K/yr? The bike for the kid is not a necessity. It is a luxury. Being able to afford more luxuries is one of the main incentives to be more productive. What is wrong with more productive people having greater ability to purchase luxuries?
The difference is that buying your kid say a bike for someone making 50k/yr is a higher % of income than for someone 200k/yr.
Posted on 4/9/15 at 7:59 am to Poodlebrain
A lot must be wrong with it, because the current tax code is extremely punitive for anyone who starts to make over $150K. If you take S Corp distributions conservatively, let's say based on the last year, and keep current distributions in the S Corp for cash flow, what good are retained earnings at that point. Try to write yourself a check for that.
There is the practical, and there is the theoretical. The current system ins't set up for moderately successful persons, persons who employ the largest percentage of the remainder of taxpayers, it is set up for extreme wealth, and on the other end, set to to perpetuate votes from the "poor." It is set up to perpetuate government, and less obviously a couple of tax related industries. No way ever should my tax return by 70 pages long for what I take home.
There is the practical, and there is the theoretical. The current system ins't set up for moderately successful persons, persons who employ the largest percentage of the remainder of taxpayers, it is set up for extreme wealth, and on the other end, set to to perpetuate votes from the "poor." It is set up to perpetuate government, and less obviously a couple of tax related industries. No way ever should my tax return by 70 pages long for what I take home.
Posted on 4/9/15 at 8:06 am to LeonPhelps
quote:
Who here is a CPA that does absolutely nothing with taxes yet constantly gets tax questions from friends and family and is assumed to be very busy until April 15? I don't know how many times I have explained to people that while I am a CPA, I had one tax class ever and have not had anything to do with taxes since then. Yet like clock work, I get those tax questions every year.
This is the only reason I even remotely keep up with tax law. Hell, I think it took my wife several years to understand that I don't do tax work and to quit telling people I could probably answer their questions
. "No...I can tell you how I think the rules would apply to your situation with my knowledge of how tax law works, but you should consult a tax accountant". Same thing for attorneys.
Posted on 4/9/15 at 8:34 am to Iowa Golfer
quote:
No way ever should my tax return by 70 pages long for what I take home.
I feel better now, mine was only 55 pages
But once I add my LLCs, I'm well, well over 100 pages of total BS that I have no possible way of understanding....
Anyone who thinks the current system is rational or sane is neither.
A perfect example is the variety of retirement plans...
IRA
Roth IRA
SEP
401k
self directed 401k
Simple whatever...
IT'S CRAZY, I tell you, CRAZY!
Posted on 4/9/15 at 8:55 am to Ole War Skule
Posted on 4/9/15 at 9:03 am to LeonPhelps
You a controller or something? Always thought public was a career for me until this year. 3 months of weekend work officially has the wife bitching and I can't say that this tax season was an enjoyable experience. Looking for ideas to move out, always interested in hearing what CPAs roles in industry are. Poodle had suggested, in a previous thread, that holding out for upper leel mgmt job may be the best bet.
Posted on 4/9/15 at 9:34 am to LeonPhelps
Retired from industry, almost 5 years, wife still thinks all CPAs are experts in all manner of taxes and investing.
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