The President

[jimenright]

said tonight in his State of the Union Message that the tax code should be simplified. It seems to me that all past attempts to simplify the tax code have resulted in a more complicated code. Can this be avoided; or is there a natural law to the contrary?

[Uncle Sam]

The President

Sounds nice - rhetoric of a good political speech.

However - did he provide any technical specific facts or details?
I'll bet you he can't explain anything descriptive about what's going to be changed or how.
Just so long as he keeps repeating the $ 250,000 AGI threshholds.

[Jiggers]

Simplification

One way to simplify the tax code considerably would be the elimination of the EIC and Child Tax Credit welfare payments as part of filing.

Make that a separate department and issue the checks monthly versus all at once. Makes the money go further for necessities versus the junk that it is blown on when the big $XXXX refund is received.

It would make our work easier. But then some of us would be out of work if they relied on that type of business. I don't.

[taxxcpa]

Tax silmplification

If I had my way, the tax return would be almost simple enough to fit on a post card.

List and add Salary, interest, dividends, gross rent and business income.
List and deduct all expenses incurred in earning those incomes
Deduct Standard deduction, medical expenses, and casualty losses
Deduct exemption allowance
Pay 10% tax on the net remaining amount. (maybe an additional 5% for fat cats)

Eliminate tax on capital gains (which is basically a tax on inflation)
Eliminate all refundable and non-refundable credits other than credits for tax actually paid.

[PIGLEE]

Didn't you know, Congress definition of the word "SIMPLIFICATION" is completely different than the rest of the world. They DO Simplify every year, don't they? And every year they seem to do it better.

[ttbtaxes]

If I had my way, the tax return would be almost simple enough to fit on a post card.

List and add Salary, interest, dividends, gross rent and business income.
List and deduct all expenses incurred in earning those incomes
Deduct Standard deduction, medical expenses, and casualty losses
Deduct exemption allowance
Pay 10% tax on the net remaining amount. (maybe an additional 5% for fat cats)

Eliminate tax on capital gains (which is basically a tax on inflation)
Eliminate all refundable and non-refundable credits other than credits for tax actually paid.

On its face "flat tax" sounds easier but the devil is in the details. There would still be enormous tax issues related to what constitute "expenses" and what the "net profit" really is. Accounting methods, depreciation, passive activities, at-risk, elections, and on and on and on.

I don't see a flat tax any easier except for those who have a W-2 and a few deductions. That's almost none of my clients. For those who have to determine "net income" there would still be volumes of regulations, court cases, rulings and procedures.

[taxxcpa]

What constitutes expense?

On its face "flat tax" sounds easier but the devil is in the details. There would still be enormous tax issues related to what constitute "expenses" and what the "net profit" really is. Accounting methods, depreciation, passive activities, at-risk, elections, and on and on and on.

I don't see a flat tax any easier except for those who have a W-2 and a few deductions. That's almost none of my clients. For those who have to determine "net income" there would still be volumes of regulations, court cases, rulings and procedures.

Depreciation should be simplified: just three categories: 5-year, 10- year, & 15-year property & straight line method only. Any consistent accounting method should be accepted. Passive activities should be no different from active activities. At-risk might need some rules

[taxmandan]

We get myopic in our view since we think the tax code is about collection revenue for the government to spend. The elephant in the room is the social engineering that drives the complexity behind taxation. The pols want to manipulate our lives and this is one means to do so, hence we have EITC, energy credits, etc. etc. And that's why there will be no simplification of revenue redistribution.

[joanmcq]

Passive income limitations were created in the 1986 reworking of the tax code to get rid of tax shelters. so would you bring back that loophole?

[Bees Knees]

Passive income limitations were created in the 1986 reworking of the tax code to get rid of tax shelters. so would you bring back that loophole?

Not to mention AMT was created in the late 1960's because a couple of millionaires got by with paying no income tax. Would we want to bring back that loophole as well?

[Bees Knees]

Passive income limitations were created in the 1986 reworking of the tax code to get rid of tax shelters. so would you bring back that loophole?

At risk limitations were also invented to get rid of tax shelters. Simplify the code and we will have all kinds of ways to let rich investors pay no tax.

[NotEasy]

One way to simplify the tax code considerably would be the elimination of the EIC and Child Tax Credit welfare payments as part of filing.

Make that a separate department and issue the checks monthly versus all at once.

I raise my hand (and my foot) to support your idea. I can never understand why the IRS would lay the responsibility on the tax preparers to determine who gets the social welfare assistance (in the form of EITC). And then the tax preparers will be severely punished because of mistakes made out of it.

[taxcraft]

Status Quo

I believe that in today's climate, any change, no matter the promises, will make it worse for anyone not supported by lobbyists. Oppose all change.