by This Is Tax Simplification? I happen to support tax simplification that does not increase regressivity of the tax system, and I recognize that there are a few parts of the Trump tax change that do that. But mostly it massively increases regressivity, along with massively increasing the budget deficit at a time when we are not too far from full employment. As it is, however, the new tax law turns out to be riddled with all kinds of ridiculous unintended consequences that complicate the tax code absurdly and that in some cases were not meant to be put in and are creating major problems for certain groups of people. One that is reportedly hurting especially are farmers, and GOPs in Congress now want to fix some of these blunders. Of course much of this
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This Is Tax Simplification?
I happen to support tax simplification that does not increase regressivity of the tax system, and I recognize that there are a few parts of the Trump tax change that do that. But mostly it massively increases regressivity, along with massively increasing the budget deficit at a time when we are not too far from full employment. As it is, however, the new tax law turns out to be riddled with all kinds of ridiculous unintended consequences that complicate the tax code absurdly and that in some cases were not meant to be put in and are creating major problems for certain groups of people. One that is reportedly hurting especially are farmers, and GOPs in Congress now want to fix some of these blunders. Of course much of this is due to their super hurry to get the bill passed without proper hearings and vetting that obviously were called for in the case of such a massive change in our tax laws. We are going to be discovering these gliltches for some time to come.
There was an article in yesterday’ Washington Post (“Tax ‘planning frenzy’: The hunt for loopholes,” by Jeff Stein) noting some of the nonsense that is going on, especially regarding professionals. Stein says that “doctors are going berserk” and they are the ones especially caught up in the “tax planning frenzy.” To give some idea of what is going on I shall simply quote the opening paragraph of the article, which provides further details.
“In hopes of paying less in taxes, several surgical centers in Louisiana are considering spinning off their parking garages into separate businesses. Eye doctors in Florida are looking at separating their eyeglass business from their medical practices. And small and midsize law firms around the country are pondering treating their offices as distinct real estate companies.”
One of the virtues of real tax simplification is that it would reduce our society’s massively wasteful use of tax accountants for rent seeking tax avoidance. But this new law is clearly going to provide a major bonanza for that socially useless profession.
Oh, one final tidbit. Apparently there are (at least) 39 “unresolved tax problems for which the American Institute of CPAs, the nation’s leading association of accountants, has asked for ‘immediate guidance'” on from the IRS. But the IRS is swamped, with its budget cut, and in no hurry to resolve these matters. Such fun and games. No, tax simplification this is not.
Barkley Rosser