A Fair Tax Take

My Fair Tax Read and Response

Representative Kevin Yoder, wrote a post on Medium supporting the Fair Tax. You can read it here: Why Now Is the Time to Try the Fair Tax

My questions to Rep. Yoder should be attached at the bottom of his original post, but can also be found here: Okay… But What is It?

Cut To The Chase

I'm not necessarily opposed to the idea of a consumption tax. But I am extremely skeptical that a consumption tax can achieve all of the positives as billed without any of the negatives of the current system(s).

It seems that the biggest argument in favor of a "fair tax" is the barring the doors to the IRS. SPOILER ALERT: Regardless of what your tax system looks like, there will still be at least one government agency in charge of enforcing the collection of tax revenue.

Ok Then Smarty, What's YOUR Idea?

Instead of just sitting at my keyboard and hating everyone else's ideas, I want to subject myself to the ridicule of a mouthy, smart aleck blogger. So here are four areas of the tax code that should be stricken permanently for tax years beginning 2015 and beyond. I had personal experience with each of these tax provisions as a professional tax preparer earlier in my career.

The first two items are temporary differences that would, over the long term, result in zero net change to taxable income. The second two items are permanent differences that reduce taxable income that only certain types of business are allowed to utilize.

• Section 168(k): Bonus depreciation.
  
• Section 179: Election to expense certain depreciable business assets.
  
• Section 199: Income attributable to domestic production activities. Often called the Domestic Manufacturing Deduction (DMD) or Domestic Production Activities Deduction (DPAD)
  
• Section 992: Requirements of a domestic international sales corporation. Dealing with IC-DISC entities and the tax rate reduction for domestic entities with international export sales.

Will some businesses pay a higher tax liability year over year? Yes, likely.

Will it matter to them in the long term? Nope.

Can you hear the lobbyist screams? Oh, but what about THE JOBS? THE JOOOOOOOOOBS?

I'm agnostic to the notion that these tax provisions ever "created" jobs in the first place. No one knows or can know how many jobs were "created" by bonus depreciation.

If you're a business owner saying that you'll be forced to lay off workers from your export company if your ordinary income can't be shifted into preferential dividend tax rates, I say to you, "look you can't be serious, man, you CANNOT be SERIOUS!"

Four steps to making the existing tax code and business tax return preparation less complex without decreasing Federal tax revenues.