Too Many Tax Reform Ideas

Here are a number of recent discussions on how to reform the tax system in the USA. While at first blush it is good to see so many people acknowledging the need for some substantial change, we've been down this road before, several times. When so many different options for change are proposed, the public's brain locks up and we almost always end up with no change. Analysis paralysis.

It's exactly like what good sales people are taught when working with customers. Show them just a few selections from which to choose. If you show them too many at one time, their brain starts to smoke and they will back away and refuse to make any decision. That is what always happens any time there are several different tax change ideas bandied about. People say that it's just too confusing and they would rather just leave everything as is. The devil you know vs the devil you don't know cliche; which is very apropos for taxes.

However, just to stay on top of what ideas are being discussed, I have some current examples to look at.

Replacing the income tax with a national sales tax is an idea I have long supported; but it's too radical a change to expect to actually happen. The only way to make it effective would be to partner this change with an official repeal of the 16th Amendment. Otherwise, the income tax will be resurrected in a few years.

Here is a perfect example of an unpleasant reform. This Yale professor wants to remove the income tax for everyone except the evil rich (anyone earning more than $100,000 per year) and then jack up income and estate taxes on the evil ones. He wants to also add a national sales tax for everyone.

Tinkering with certain details of the current tax system is what generally makes it into reality.

Whichever kind of tax system we have, from now until the end of time, there will be a need for those of us who can advise clients on how to minimize their taxes. Even with inexpensive tax computer programs and free electronic filing, it is still a matter of GIGO (garbage in, garbage out).

KMK
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/28/2002 11:23:00 AM Send this post: