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November 26, 2022

Accounting News Roundup: Getting the Best Talent to Leave and Victory Tax Exemptions | 10.11.16

Getting your best talent to leave

For years now, accounting firms have been trying to solve the problem of attracting and retaining the best talent. Try as they might, many firms have a hard time getting those people — any people! — in the door and then, once they have them, keeping them. 

But what if that was wrong? Here's a Wall Street Journal article on "Why the Best Leaders Want Their Superstar Employees to Leave" and it features this paradox:

When you stop hoarding your people and focus on creating a talent flow, you find that more of your top people actually do wind up staying.

In other words, if an employer manages to create a reputation for attracting lots of talent, sure, some of those best employees end up leaving, but because you have a steady stream of talented people, some will stay too. Being able to create a firm that is a "talent magnet" is the real trick and not in the way the Big 4 do it — attracting all the talent. 

Most accounting firms will never be able to compete the Big 4's resources so they have to attract people in a completely different way. The idea that a firm could create a name for itself in a way that is different from the Big 4 will help a great deal in this regard. And maybe, just maybe, that includes being a launchpad firm that sees many people go on to do really interesting things and build their own successes.

Obviously, accounting firms don't do this. Many cling to the talent they have and come off as desperate for more. That turns people off and says a lot about the firm. If leaders focus on becoming a place where really talented people want to work but then go on to incredible careers elsewhere, that demonstrates a culture and reputation other firms won't be able to match. 

Or, as I like to suggest, keep doing what you're doing. Whatever.

Tax code complexity

I'm all for supporting our athletes but exempting the cash prizes of medal winners seems a little jingoistic and is, without a doubt, bad tax policy. So naturally, it had widespread support in Congress and the president signed it into law:

Currently, the U.S. Olympic Committee pays athletes $25,000 for winning a gold medal, $15,000 for a silver and $10,000 for winning a bronze. Those amounts are currently subject to taxes as they’re categorized as income. The new bill, which cleared the House by a vote of 415-1, will change that.

"Most of these athletes will never sign an endorsement deal or a professional contract, which is why it's so important that these athletes will no longer be forced to pay a big tax bill when they achieve their Olympic dreams representing the United States," said Robert Dold, who sponsored the bill.

Are there international accounting competitions that involve cash prizes? Have you won one? Then you should be outraged by this. Where's your victory tax exemption? I look forward to the day when I achieve my dream of representing the United States in a blogging competition and winning the top prize so I can lobby for an exemption.

Has Donald Trump released his tax returns?

Nope! But sinced DJT called him out in the debate on Sunday night, Warren Buffett released some of his tax return information to demonstrate how easy it is:

On Monday, Buffett said he paid $1.85 million in federal income taxes in 2015 on adjusted gross income of $11.6 million. That would mean he paid an effective federal income tax rate of about 16 percent. In 2013, the most recent year for which data are available, the top 1 percent of earners paid 27 percent, according to an analysis of Internal Revenue Service data by the Tax Foundation.

“I have no problem in releasing my tax information while under audit. Neither would Mr. Trump — at least he would have no legal problem,” Buffett said. Here are a few other things he does differently from Trump as it relates to taxes. 

Buffett gave over $2.8 billion to charity just last year (only taking $5.5 million in deductions, however). Trump doesn't seem to give much to charity and even uses donations to his foundation to settle business disputes. Buffett also stated that he's never used "a carryforward" which differs greatly from Trump who seems to have used an NOL for several years, maybe decades. For that, Trump calls himself a genius and also claims to be perfect. I seriously doubt Buffett gave himself the "Oracle of Omaha" nickname.

Okay, that last one is a stretch, but you get the point.

Previously, on Going Concern…

I played hooky yesterday (you should try it sometime) but here's a new Open Item from someone who wants to know what to expect in an interview with PwC.

In other news:

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