This course has helped me in many ways significantly and has helped me understand more detail on
taxation and the concept surrounding it. With the final project requiring the tax forms to be complete,
I believe I was able to grasp an understanding a better understanding of each entity and how they are
taxed but I was also able to understand the many advantages and disadvantages of specific tax
implementations associated with each entity. While the numerous tax codes we researched and
discussed over the course of this semester may have been a little overwhelming at first, the rules and
regulations enforced by the IRS became easier to understand when it came down to applying them to
a real-world scenario. In an overall sense, my well-rounded knowledge and understanding of taxation
have influenced my opinion toward the approach to taxation that has been enacted by the U.S.
Congress. I believe that if Congress were to consider an alternative approach to taxation, such as
enacting a value-added tax or the Fair Tax Act of 2015, the U.S. economy would be in much better
shape.
The Principles of Interpretation describes in the FairTax Act of 2015 that when enacting this value-
added tax, “any sales tax administering authority shall consider the purposes of this subtitle” which
includes reasons, such as, to raise the revenue needed by the Federal Government, to tax all
consumption of goods and services in the US once, to simplify the tax law and reduce the
administration and compliance costs of the tax law and to prevent double, multiple, or cascading
taxation” (FairTax Act, 2015). Given the supporting evidence presented above, it is my opinion that
enacting a value-added tax, or the Fair Tax Act would most definitely provide economic benefits to the
United States. Congress would not only allow for more long-term sustainable growth but also help
individuals save and invest more money today, which ultimately will boost the economy in the future.
I do believe that congress should consider an alternative approach to taxation. I work for a CPA firm
and the clients I work closely with are in the 37% federal tax bracket and they are located in California
which also adds an additional 12.3%. One example is a client who sells real estate. She is commission
based so she does not get a W-2 to elect to have withholding and as a rule we tell her to put 50% of all
of her commission in the bank account and save it for taxes. Granted after she gets to deduct all of her
expenses she doesn’t owe 50% of her gross income but she at least has the money to pay taxes and put
in her profit sharing plan. I always wonder why we don’t have a flat tax rate. The government would
still get a percentage of what you earned and taxes would be uniform among all taxpayer. For
example, taxpayer A has AGI of $50,000 and the uniform tax rate is 15% they will owe $7,500. Then
taxpayer B has AGI of $500,000 their tax would be $75,000.
I find it interesting when reading the Fair Tax Act of 2013 and about VAT. The Fair Tax Act would be
an interesting to see enacted, especially since states vary in their sales tax rates and income levels. The
first thing that crossed my mind is the need for accounting professionals would decrease if there is no
need to file income, payroll or estate and gift tax returns. The VAT is a simple method of tracking and
paying tax but the US News article states what I was thinking best. Many experts consider [VAT] to be
regressive, that is, it hits poorer people harder than the wealthy, as it takes away larger share of their
income and makes necessities more expense (Kurtzleben 2013).
Two things are for certain, death and taxes. This course has provided valuable insight on the latter.
Taxes are a revenue generator for the government but more than they are a tool to provide incentive or
disincentive. As governmental spending has increased throughout time, new means of taxation have
arisen. Most know of sales tax and income tax, estate taxes and gift taxes which we learned are part of
the same unified tax system are also well know. Complexity of the tax code can require accountants
and tax attorneys to help lay people understand, there are appealing factors of a simplifier VAT. A
VAT can be used to generate tax at every step in the supply chain with a relatively simple method
while also broadening the base like the sales tax to consumable goods and services consumed by all.
A valid concern is imposing a VAT that will disproportionately affect lower income individuals since
most of their income is spent on consumables while wealthy individuals who have the means to invest
in businesses that will pass on the burden of the VAT to the end customer
There is no shortage of details in the world of taxation, for this my favorite lesson was one I learned in
module one and continued to apply throughout the course. As a tax advisor you are to help meet your
client’s business objectives as tax efficiently as possible. z To me this means you need to ask questions
to understand the client’s true wishes, and this means that there are a multitude of paths you can take.
There can be more than one correct answer, or there could be a more tax efficient path but not one a
client wants to take. Throughout this course I have I have found myself concluding “it depends” more
than knowing for certain.
After reading articles about value-added tax and the Fair Tax Act, both seem to provide economic
benefits, however, the Fair Tax Act sounds more appealing. It seems to be focused more on doing
good for the people and helping those who really need their jobs, keep them. The Fair Tax Act plans to
replace income and payroll taxes by implementing national retail sales tax, a revenue replacement
method, and a rebate (FairTax.org, 2007). Since the Fair Tax Act removes income taxes, this helps
companies not raise their retail prices to make up for their high income taxes. This allows for
competition to drive prices down, keeps labor cost down ensuring more jobs for America, and
improves the performance of retirement/pension funds. Another economic benefit of the Fair Tax Act,
is it removes the cost of corporate taxes and compliance cost of U.S. exports, essentially increasing the
demand for U.S. exports, which in turn creates more jobs and gives U.S. products a price advantage to
foreign products. There are many other benefits to the Fair Tax Act, but these are these benefits are the
ones that essentially benefit the economy.
Explain how this course has helped your understanding of taxation.
Funny you should ask. My wife and I were having dinner with friends, one of which had just entered a
new business arrangement. He was bringing his expertise, having opened several popular restaurants
he did not own a stake in, the other two stake owners would provide land and capital. His basis in the
new business would be different from the other two owners and therefore his taxes would be different
and potentially expensive, depending on the form of the business. He wasn’t 100% sure the form and
was going to doublecheck. I strongly suggested that he find out, because if the business was set up as
an S-Corp, his tax obligation could be significant. I then got on my soapbox and harassed our other
friend to stop operating as a sole proprietorship, now that her tattoo shop was getting more and more
successful. Everyone needs to protect their assets once they have assets to protect. The class has
helped me terrify my friends.
Do you think Congress should consider an alternative approach to taxation?
Before I answer that question, let’s address the elephant in the room, we as a country have a
massive problem. Every American believes they are overtaxed, they pay the highest taxes in the
world, and taxes have never been higher. This is hardly the truth. There are countries that pay much
higher taxes than the US and not that long ago our highest tax bracket was like 90% in the 1940s. I
think part of the issue is that politicians keep telling people they are overtaxed and, arguably, folks
don’t see their income taxes benefiting them. If we are going to successfully implement a new tax
system, we need to do a great deal of work to educate the public. And if the last few years are any
indication, that data will be met with widespread disinformation. But let’s say we caught everyone on
a good day and could implement an alternative approach to taxation in the US.
There are currently two alternatives that keep being proposed, the Value Added Tax and
Consumption Tax. In both situations we get away from income-based taxes and move towards higher
taxes on goods and services. VAT could work, but it shifts so much of the burden to lower- and middle-
income families. Consumption taxes have the same issue, forcing the system to give rebates to low-
income families. In both cases, in my opinion, we are just moving deck chairs on the Titanic. Congress
does need to consider all approaches to taxation. We need to tax wealth and simplify the income tax
system. Make sure everyone (including corporations) pays their fair share. I am also intrigued by the
idea of wealth losing its value if removed from the economy (horded) and a maximum wage. Maybe
I’m just being an instigator, but I am fascinated at how much more upset people get about a maximum
wage (which will never impact them) verses a minimum wage (that impacts so many).
Would enacting a value-added tax or the Fair Tax Act provide economic benefits, in your opinion?
Value Added Taxes can raise a great deal of money, is simpler than our current system, and
avoids making the wealthy pay their share. It would benefit the economy but could hurt young and
poor households. Both VAT and the Fair Tax Act of 2015, consumption tax, would tie government
revenues to a more stable variable; but it does so on the backs of the low- and middle-income
households.
A value-added tax would be easy to enforce with an easy paper trail to follow. z The downside is that it
would hit lower income families harder when it comes to basic necessities.
A Fair Tax Act tax on consumption would make taxation very easy and hand out the administration of
it to each state. z A tax rebate that is higher for lower income families would mitigate the tax burden for
these families. Getting rid of the IRS in this case could save millions of dollars but would actually
make this kind of taxation harder for families because they’ll have to go through more agencies
instead of a single IRS.
I read about VAT, or value added tax and can see the appeal. The idea of placing a flat tax on
purchases to increase revenue for the country is a great idea. VATs are the third-largest source of
revenue for other member countries in the Organisation for Economic Co-operation and Development
(Dore, Kate, 2021). However, the only way I could see it even possibly working would be to lower
income taxes. Especially now with the increase in pricing and so many lower income families
struggling. It would be hard to put VAT into place. Any Presidential candidate to mention this in their
election campaign would cause lots of trouble for themselves. US Citizens are not going to want to
increase the amount of taxes they see come out of their purchases. In Virginia, we already pay an
average of 5.3% sales tax on purchases, an additional 5% in certain city jurisdictions and a 1% tax on
food and personal hygiene items Virginia Tax, 2023).
Dore, CFP, K. (2021, June 21). The value-added tax brings in billions for other countries, but the U.S.
doesn’t have one. CNBC. Retrieved April 2, 2023, from https://www.cnbc.com/2021/06/21/this-tax-
brings-in-billions-worldwide-why-theres-no-vat-in-the-us.html
Retail Sales and Use Tax (April, 2023). Virginia Tax. Retrieved April 2, 2023, from
https://www.tax.virginia.gov/retail-sales-and-use-tax
Kurtzleben, D. (2013, January 25). Commentary: Why the U.S. Should Adopt a Value-Added Tax
[Review of Commentary: Why the U.S. Should Adopt a Value-Added Tax]. US News.
https://www.usnews.com/news/articles/2013/01/25/commentary-why-the-us-should-adopt-a-value-
added-tax
FairTax FAQ. (2023, January 25). Tax Foundation. https://taxfoundation.org/fair-tax-national-sales-
tax/
Kurtzleben, Danielle. “Commentary: Why the U.S. Should Adopt a Value-Added Tax.” U.S.NEWS,
13 Jan. 2013, https://www.usnews.com/news/articles/2013/01/25/commentary-why-the-us-should-
adopt-a-value-added-tax.
Woodall, Rob. “H.R.25 - 114th Congress (2015-2016): FairTax Act of 2015.” CONGRESS.GOV, 6
Jan. 2015, https://www.congress.gov/bill/114th-congress/house-bill/25.
FairTax.org. (2007). Thumbnail sketch of the FairTaxSM a comprehensive plan to replace income and
payroll taxes. https://www.finance.senate.gov/imo/media/doc/FairTaxThumbnailSketch.pdf
Kurtzleben, D. (n.d.). Commentary: Why the U.S. should adopt a value-added tax. Retrieved April 6,
2023, from https://www.usnews.com/news/articles/2013/01/25/commentary-why-the-us-should-adopt-
a-value-added-tax
Kurtzleben, Danielle (January 25, 2013). Commentary: Why the U.S. Should Adopt a Value-Added
Tax. https://www.usnews.com/news/articles/2013/01/25/commentary-why-the-us-should-adopt-a-
value-added-tax
FairTax Act. (2015, January 06). H.R.25 - 114th Congress (2015-2016). House of Representatives.
Retrieved from https://www.congress.gov/bill/114thcongress/house-bill/25/all-info
Bansal, A., & Alfardan, A. A. (2020). Role of value added tax in the economic development of
Kingdom of Bahrain. Journal of Critical Reviews, 7(3), 17-24.
