A compromise. . .

Posted by Bruce Mc on Aug 22, 2008 in Opinions | 0 comments

“A compromise is the art of dividing a cake in such a way that everyone believes that he has got the biggest piece.”

- Dr. Ludwig Erhard

            I recently read the above and gave a great deal of thought to this.

With the study recently done by the Government Accountability Office, in any given year at least 60% of U.S. corporations surveyed paid no federal income tax, for the years of the study, 1998 to 2005. This reported by TAXGIRL in her post More Than Half of US Companies Pay No Income Tax. This is very interesting.

            The nation has been screaming for a fair tax system throughout history. (Remember the Boston tea Party?) Sooner or later there will be a revolt again, and studies like this are going to help incite such a thing.

            Where am I going with this? No where really. It just seems that more of us should think about what is going on. Our cost on, everything have gone up, we work and we pay our taxes. There is a system in place that mandates that corporations pay income tax. They have their rules and then there are rules that govern us, the working people of this country.

            Any business has the ability that if it has a good year, it can offset its taxable income from losses it faced in a bad year. NOL allows a company to deduct losses generated in previous years, in a current year. However, an individual is not allowed to carry forward federal income tax losses. In other words, if an individual has a bad year, the loss is wiped clean.

            I’m not suggesting a revolt by any means but how is this fair? If you earn income pay your taxes. A big advertising scheme by a lot of different folks is one announcing the complexity of the IRC (Internal Revenue Code). Does it really need to be so complex? I think not. However I don’t agree with the flat rate tax either. Too much goes on in life.

            I have clients that still rent. If they decide to buy a home (and they are planning for such) it would be imposable if there was a flat tax. So there needs to be cuts for this and that. Relief for different situations. If one entity is allowed to do something, so should we all.

            One of the biggest reasons I got into tax preparation was my desire to level the playing field somewhat. What I mean by this, is everyone deserves a fair share but not everyone knows how to get there. Corporate America (and around the world) gets breaks that would just make a person tax payer want to picket, something. There are a lot of rules and slides on rules that can help with your preparation and lower your tax bill. But with politics dictating that middle America pays the majority of the taxes then I say we need to change things.

            Corporate America has the biggest piece of the cake, we should have ours, you should have yours.