Tax Simplification

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- Dick Adams
  
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posted
15 years ago

Thu, Feb 19, 2009 4:08 PM

Whenever I hear tax simplification, I reach under my pillow and click off the safety catch on my Luger. ;) (That's not original to me, but I don't recall to whom I should give credti)

Now CCH reports that the New Mexico House has passed a Tax Simplification bill.

Without looking at this bill, my money says this bill will significantly increase New Mexico tax revenues. If you live in the Land of Enchantment, you voted for these guys.

Has anyone ever seen a tax simplifation bill that did not raise taxes. I'm still trying to find those wealthy people who alledgely benefited from the '86 Tax Act. ;)

Dick

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- Katie
  
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posted
15 years ago

Fri, Feb 20, 2009 12:16 AM

The 86 Act was not intended to reduce taxes; it was intended to be revenue neutral. It was meant to simplify the tax law by broadening the base (getting rid of a lot of deductions) and lowering the rate. Of course it did raise some people's taxes and lower others', but the intent was revenue neutrality. Whether that actually worked out, of course, is probably unknown because there are so many other variables that impact tax revenues.

Of course it didn't really simplify things all that much either. The

86 Act is where we get the oxymoronic "passive activity," a concept that still shifts my brain into neutral. I've always said, another round of simplification like that and I'll be outta here.

Katie in San Diego

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- Paul Thomas, CPA
  
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posted
15 years ago

Fri, Feb 20, 2009 12:59 PM

"Salmon Egg" wrote

I believe many people, including many in the tax preparation business, would agree.

The bulk of the complexity comes from tax deductions, credits, exemptions, etc.

The burden is in the keeping of the records for the deductions, exemptions and credits.

I have a business lunch meeting today. If I didn't want to take the deduction as a business expense, I could just not keep the records necessary to substantiate that expense.

We, as tax payers, can decide to make our returns as simple as pie by not taking all those complex deductions and credits. But we, as tax payers, want them and will carry the burden of record keeping.