No More Accountants

[Unregistered]

I was listening to Neal Bortz today, and he was talking about The Fair Tax (go figure). A caller called in and asked the question, "What will happen to the business owners who need financing or loans. If there is no tax return, how will the bank verify income?"

Bortz, in his normal greater than thou attitude (which is why most of us listen), said that, "CPA's will have to prepare certified P&L's to give to the bank." He then went on to say that most "CPA's" don't like doing tax returns anyway, and could make way more money under his system (under his system EVERYONE makes more money) doing certified docuements than tax returns. He also said that he has been asked on many occassions by non-accountants what will all the accountants do, but has never had an accountant say that they would go out of business without tax returns.

Well, I'm here to say that I definately would go out of business for 3 reasons:

1) tax returns constitute 60% of my income

2) people's saving habits will change, which will reduce my cut on investment/insurance sales (20% of my income)

3) payroll and bookkeeping would become much less important, as most of my clients only do these as a result of taxation (the other 20% of my income)

What does everyone else think about this statement, or the Fair Tax in general (not policitical views, but how it will affect our industry)?

JoshInNC

[Bees Knees]

If CPAs will make more money under his system, then that means the public will have to pay more to keep CPAs in business than under the current system where everyone has to file a tax return.

And since the same amount of tax would have to be collected somehow, even under his simplified system, the total amount of money coming out of the general publics pocket would be more, than currently.

So why would anyone want a simpler tax system, if it is just going to cost everyone more money?

[veritas]

What's a Neil Bortz?

Isn't the fair tax a national sales tax? That would mean more tax returns for business clients.

And let's suppose there was a national "Fair Tax" would that mean states like mine would get a rid of our income tax? Especially since we don't have a sales tax now. Would the City of Portland get rid of it's business income tax or Multnomah County business income tax? Or our local transit income tax on business?

I think the only "simple" thing is the people promoting the "Fair Tax".

Come to think of it maybe we have a revival of the Know Nothing Party!

By the way if the only people who could prepare financial statements were CPA's how on earth would they handle the business? They could not do it.

[veritas]

Fair Tax arguments

Abolishes the IRS - Ha ha!
Closes all tax loopholes and brings fairness to taxation - Ha Ha Ha !
Maintains our current Social Security and Medicare benefits- Wonderful!
Brings transparency and accountability to tax policy- You betcha
Allows American products to compete fairly -The ones made in China?
Reimburses the tax on purchases of basic necessities -Use the IRS employees who need jobs and creat new efficient govt agency ha ha


ONLY TAX NEW PRODUCTS AND SERVICES-All my services are old so "No Tax"

[S T]

Found a link

Here is a link to Neal Boortz and his Fair Tax Rally for those that might want to read more.http://boortz.com/nuze/index.html I had not heard of him until Josh NC had posted.

Sandy

[geekgirldany]

I think old Bortz was mentioned in a thread a few weeks ago. Well I went on Amazon to look at his fair tax book and how much it cost. Thought I would buy it but did not after reading the reviews. There is one really long review on there. So long that it explains the whole book and there is no reason to buy it.

I like what the reviewer puts about accountants:

"Boortz and Linder do not overlook income tax preparers, accountants, or government employees. While the FairTax would more than likely cause these persons to lose their jobs, the projected 10.5% growth in the FairTax's first year would offer a plethora of new jobs, meaning that those IRS employees, tax preparers, and tax lawyers would have to use their knowledge and transferable skills to find more productive means of work, which, for the most part, would probably be less than challenging. "

So we would have to find more "productive means of work" and it would be less "challenging", and we are put in with IRS employees. Don't know about that one

I've had clients ask me what I would do if there was a "fair" tax. I told them I would be preparing all the new paperwork businesses would have to file. Which would then make the products you will be buying more expensive because they will be paying me more to prepare these papers.

There would still be work for us in the business sector. I don't ever see the fair tax thing happening.

[JoshinNC]

I'm not knocking Boortz,

I listen to him everyday, and agree with most of his social commentary (although he is a little arrogant). I just thought that that line of reasoning was his way of appeasing our business and was quite proponderous.

[OldJack]

It would be wonderful and the increase in profits could fund early retirement if I could "get rid" of doing personal 1040 tax returns. Then maybe I would have more time for accounting and consulting work that pays a much better profit. I agree with whoever this guy is but I am not holding my breath that anything is going to change.
When you think about it, why should the public have to go thru such turmoil every year with self assessed taxation if something like a national sales tax could eliminate it and be so simple?

[Jiggers]

National Sales Tax

For a National Sales Tax to work AND BE FAIR, everything would be taxed. Doctors would have to charge sales tax on their services, attorneys have to charge sales tax on their services.

Barbers, beauticians, surveyors, architects, etc. would have to charge sales tax on their services.

Food, medicine, medical services would have to charge sales tax.

Otherwise, it is not fair to exclude certain services or products.

Farmers would have to collect sales tax on their cattle sales, either through the livestock sales commission company, or on the sale that they make directly to individuals.

Farmers would have to collect sales tax on the hay that they sale to other farmers.

Again, you can't exclude anyone from the sales tax.

When you start excluding someone, you start making loopholes, and someone will try to get their business to be covered by the loophole.

[veritas]

And don't forget we won't need the IRS anymore because everybody knows that all sales tax gets collected and paid.

Ha Ha ha ha!

[OldJack]

Again, you can't exclude anyone from the sales tax.

In other words you think the national sales tax would not be fair if it was done fair like the states do it.

[Bird Legs]

Entitlements

from the Governmet. How would these apply? Rewards to taxpayer when both parents
work and have a child in day care? Earned Income Credit? Tuition credits?
After all, the federal gov't. has to reward these people. After all, the federal income tax
is not just a revenue gimick for the governmental use, but to punish or reward the
society as a whole.
Gov't says we need more children in day care. O K. let us increase the credit where
both parents are working. Maybe this will encourage the moms' staying home to take
care of their own children to go out and find a job and turn their children over to
a day care to take care of.. Voila' .
How would the above be done with a national sales tax or a flat tax?

[jainen]

Businesses are exempt

How would day care work? Quite well. You see, under the Fair Tax only consumers have a tax burden. Businesses are exempt from the sales tax, as is employee compensation. Therefore I will only work for a company whose compensation package includes child care (and cars, housing, food, whatever else I need).

It might be a little dodgy, but I don't think so. Anyway, there is no enforcement agency. The state is supposed to handle collections but it isn't going to be particularly interested in pulling billions of dollars out of its own economy for the benefit of Washington lobbyists. If it even wants to do something at least for political show, the state dockets will be full with the black market and barter scams that develop to avoid the 30% tax.

[Unregistered]

from the Governmet. How would these apply? Rewards to taxpayer when both parents
work and have a child in day care? Earned Income Credit? Tuition credits?
After all, the federal gov't. has to reward these people. After all, the federal income tax
is not just a revenue gimick for the governmental use, but to punish or reward the
society as a whole.
Gov't says we need more children in day care. O K. let us increase the credit where
both parents are working. Maybe this will encourage the moms' staying home to take
care of their own children to go out and find a job and turn their children over to
a day care to take care of.. Voila' .
How would the above be done with a national sales tax or a flat tax?

Well said Bird Legs!

[Jiggers]

National Sales Tax Unfair

In other words you think the national sales tax would not be fair if it was done fair like the states do it.

You got it correct. Here in the great state of Taxus, the sales tax code is more complicated than the IRS code!

In fact, I won't make a determination or help a client determine if his business is collecting sales tax correctly.

For instance, certain services are taxable for business use, but not for residential use. Also, if you have, for instance, a refrigerator that needs repairs and you take it to the shop, the parts are taxable, the labor isn't. If the repair man has to go to a business to repair the same refrigerator, the labor and the parts are taxable.

Farmers can buy all sorts of stuff tax-free. Go to the lumber yard to buy lumber to repair their residence and they say that it is for the farm, sign a statement, and get it tax free. Others buy stuff at the lumber yard for their rent houses and say that it is for their farm, that they do not own, and get it tax free.

Data processing services are taxable. Bookkeeping is not. Preparation payroll reports such as W-2's are. The total tax rate in Taxus is 8.25%, however these type of services are taxed at 6.6%!

And on and on and on.