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 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 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. a 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.
References:
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/FairTaxThumbnailS
ketch.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
