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November 27, 2022

Accounting News Roundup: Replacing Corporate Taxes; Calculate Your Meeting Costs; Performance Evaluations | 01.12.16

A Progressive Way to Replace Corporate Taxes [NYT]
People are worried about inversions, tax avoidance and the eroding corporate tax base. The story goes that all these companies could spend their energy curing cancer, building flying cars, sending rockets to Mars, etc. rather than working on elaborate schemes to dodge taxes. Legally, of course. Anyway, here's an idea from Dean Baker, co-director for the Center for Economic and Policy Research that, apparently, gets kicked around in academic circles:

Suppose that, instead of taxing corporate profits, we required companies to turn over an amount of stock, in the form of nonvoting shares, to the government. We can fight over the percentage later (we’d want to match what we ideally get from corporate income taxes now, so presumably between 17 and 35 percent, depending on where you sit on the political spectrum). But first we can focus on the principle.

The shares would be nontransferable, except in the case of mergers or buyouts, but they otherwise would be treated just like any other shares. If the company paid a dividend to its other stockholders, then it would pay the same per share dividend to the government. If it bought back 10 percent of its shares, then it would buy back 10 percent of the government’s shares at the same price. In the event of a takeover, the buyer would have to pay the same per-share price to the government as it did to the holders of other shares.

The advantage of this approach is that there is no way for a corporation to escape its liability. A portion of whatever profit it makes will automatically go back to the government, no matter what it does. It also eliminates the enormous cost and waste associated with complying with or avoiding the corporate income tax (there would be some start-up and monitoring costs, of course, but nothing like what current enforcement requires). And federal revenues will go up, because companies will have incentive to do what is most profitable, not what minimizes their tax liability.

In theory, I'm on board. It removes the motivation and ability to avoid taxes, which is ultimately why companies go to great lengths to minimize their taxes — it's there for the taking! But like most tax policy ideas, it's just that: an idea. There isn't any shortage of tax policy wonks out there that will debunk this idea with their own carefully worded rebuttal without even mentioning that it's not politically feasible. It's about as realistic as Ted Cruz's plan to abolish the IRS. I mean, scrap the whole corporate tax code? I think too many people would miss it.

Estimate the Cost of a Meeting with This Calculator [HBR]
If there's one thing that accountants don't need but have been dying to have, it's a calculator that will allow them to estimate how much money they're wasting in meetings. Luckily, the stop watches on your phones will make these estimate incredibly accurate, thus reliable. Of course, once you realize how much money everyone's wasting, you'll want to get out your calculator flask.

Annual Staff Evaluations [AT]
Here's an apt description of performance evaluations:

They are forced meetings that lay on complaints and blame for past failures, many of which are not remembered or are vague memories at best. I have rarely seen resulting changes last more than two or three weeks before old habits are reverted to. I think these annual meetings are a waste of time.

The only thing I'd add is that they scare the bejesus out of Millennials.

In other news:

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