Yesterday morning, Accounting Today published a few letters from readers sent in response to AT’s August 26 article titled Do we need accounting firms? Editor-In-Chief Daniel Hood specifically invited reader comment when he asked out loud if we can do without accounting firms and, as expected, there were comments to be had.
Like Randy Crabtree, CPA who said “we don’t need more traditional accounting firms; we need more forward-thinking accounting firms.” Randy’s cool.
And a couple of academics with a lot of letters after their names used “germinating” in a unique way to say that accounting firms serve a purpose as the proving ground for young accountants which, yeah, OK, we’re on board with that.
4. Germinating the next generation of accountants. Accounting firms are largely responsible for propagating our profession on several levels. Independent platforms or sole proprietors who collaborate ad hoc on specific engagements would have no incentive to do this, and even if they did, they would be unlikely to do it as well due to their independent arrangements. For example, accounting firms offer invaluable internships that allow future accountants to explore the profession. They provide the indispensable service of shepherding inexperienced graduates, also allowing them to satisfy initial employment requirements for licensure, and usually reimbursing their CPA exam fees and providing free study materials. Furthermore, they provide practice rotations, which allow even experienced accountants to reenergize their careers or to start a new career path.
But then you scroll to the bottom and you have Frank. Oh, Frank.
Where did that even come from? Who hurt you, Frank??
Good question, you say? If you mosey around the web for a nanosecond, you’re likely to run into an article that is debating whether or not the 43rd President’s tax cuts from 2001 and 2003 should be continued. Since Nancy Pelosi is determined to get a vote on this pre-election day, the political rhetoric on this issue is flowing like a river of sewage you dare not dream of.
To help you make sense of it all, we perused some of the tax wonkiest corners of the web to bring you some perspective. And of course, some less bright observations.
• The Tax Foundation has a breakdown of how the expiration of the tax cuts would affect “Average Middle-Income Family, by State and Congressional District.” It’s simple to find your state/district to see the effect that the expiration of the cuts would have on you.
• Over at the Journal, Washington Wire presents the biggest winners and losers from the tax cuts being extended:
Among the states that would save the most from extending the tax cuts, according to a draft of the study: Alaska ($1,959 per family); Connecticut ($1,903); Maryland ($1,756); Massachusetts ($1,831); New Jersey ($1,860) and Utah ($1,779). The lowest savings for middle-income families would be in D.C. ($1,237); West Virginia ($1,316); and Mississippi ($1,355).
• Apparently Alan Greenspan still has a shred of credibility left because he weighed in a couple of weeks ago, telling Bloomberg, “I should say they should follow the law and let them lapse.”
• The Beard doesn’t agree with his predecessor, telling the House Financial Services Committee, “In the short term I would believe that we ought to maintain a reasonable degree of fiscal support, stimulus for the economy. There are many ways to do that. This is one way.”
• William G. Gale, a senior fellow at the Brookings Institution and co-director of the Urban-Brookings Tax Policy Center, wrote in the Washington Post about five myths around the tax cuts, including their affect on small businesses:
One of the most common objections to letting the cuts expire for those in the highest tax brackets is that it would hurt small businesses. As Sen. Orrin Hatch (R-Utah) recently put it, allowing the cuts to lapse would amount to “a job-killing tax hike on small business during tough economic times.”
This claim is misleading. If, as proposed, the Bush tax cuts are allowed to expire for the highest earners, the vast majority of small businesses will be unaffected. Less than 2 percent of tax returns reporting small-business income are filed by taxpayers in the top two income brackets — individuals earning more than about $170,000 a year and families earning more than about $210,000 a year.
• Derek Thompson is a little more pragmatic than most, arguing that President Obama should extend them for a year in order to buy some time to work on comprehensive tax reform:
The president should extend the Bush tax cuts — yes, the whole dang thing — for a year to temporarily silence his critics. Then he should use 2011 to knock it down and build a tax system that’s right for the next decade. Working off a bipartisan plan, real tax reform would simplify the income brackets and eliminate the multitude of deductions and exemptions that distort the economy with bad incentives and leave hundreds of billions of dollars on the ground.
• Fred Thompson (no relation that we know of) is using his camera moxie to voice his support for the extension of the cuts:
The cuts for the rich are likely to be extended for at least two years. The cuts for the middle class are sure to be extended for even longer than that. Total cost to the deficit over the next 10 years? More than $3 trillion, and maybe more than $4 trillion.
But according to a Pew poll, the American public isn’t as sure about this as the politicians are. A slight plurality — 31 percent — want all the tax cuts repealed. Thirty percent want the cuts for the rich extended. In other words, opinion is divided.
• And even though she needed crib notes, Sarah Palin managed to tell Fox News’ Chris Wallace that letting the cuts expire ‘idiotic’:
“[Obama’s] commitment to let previous tax cuts expire are going to lead to even fewer job opportunities for Americans,” Palin said. “It’s idiotic to think about increasing taxes at a time like this.”
“My palm isn’t large enough to have written all my notes down on what this tax increase, what it will result in,” Palin continued.
Host Chris Wallace noticed that Palin did indeed have something written on her palm. “Can I ask you, what do you have written on your hand?” he asked.
“$3.8 trillion in the next 10 years,” Palin responded, “so I didn’t say $3.7 trillion and then get dinged by the liberals saying I didn’t know what I was talking about.”
But who would ever get the idea that Sarah Palin didn’t know what she was talking about?
An interesting idea from the Tax Foundation’s Blog today that comes by way of Nebraska State Senator Rich Pahls. TF reports that Senator Pahls plans on introducing legislation that would broaden the sales tax base that would, theoretically, lower income or property taxes. TF takes it slightly further than Senator Pahls and suggests that groceries should be included in this broadened base.
There are few states that already tax groceries: “Alabama, Arkansas (3%), Hawaii, Idaho, Illinois (1%), Kansas, Mississippi, Missouri (1.225%), Oklahoma, South Dakota, Tennessee (5.5%), Utah (1.75%), Virginia (1.5% + 1% local option tax), and West Virginia (5%),” and TF argues that more states could benefit from this policy:
Broadening the sales tax base and lowering the rate is a good idea and a move in the direction of sound tax policy. Services should be taxed. Groceries should be taxed. All end-user consumption should be taxed. There is no reason that entire sectors of the economy and swaths of consumption should go untaxed while others are singled out for taxation. Broadening the tax base allows the government to raise the same amount of revenue with a lower tax rate, which reduces distortions in the economy. Taxing all consumption at the same low rate keeps lawmakers from picking winners and losers in the market and ensures you will be taxed equally no matter what you choose to purchase.
Unless you’re one of those people that doesn’t want pay taxes period, this is a sensible solution for states looking to close their budget gaps (even just a little bit). BUT! As you might imagine, taxing groceries is a hot political spud that, for some, is simply not an option:
[T]his type of reform is seen as radical and a political non-starter. One reason is that people have concerns that changes such as applying the sales tax to groceries might unfairly or disproportionately impact the poor. Even Sen. Pahls seems reluctant to embrace this “emotional” reform.
First, remember that broadening the tax base allows us to lower the rate, so that everyone, poor and rich alike, will be paying a lower tax rate on their non-grocery purchases, offsetting some of the increased tax paid on groceries. Still, lower income people spend a disproportionate amount of their income on necessities like food, and they may very well come out behind even after accounting for the lower rate. Then I would recommend implementing or expanding food assistance programs (which provide free food, not just tax-free food) targeted at those who truly need it.
The bottom line is that most of us can afford to pay sales tax on our grocery purchases. Exempting groceries for everyone is a very costly and indirect way of providing assistance to the poor.
Forget for a second that most state politicians can’t entertain actual solutions to budget problems and taxing groceries is sound policy. Think about it. If a states settles on a 5% grocery tax and you purchase $100 worth, that’s an extra $5. That isn’t going to put anyone on the street and if it does, we recommend sticking to the produce section where food is considerably cheaper.
Good question, you say? If you mosey around the web for a nanosecond, you’re likely to run into an article that is debating whether or not the 43rd President’s tax cuts from 2001 and 2003 should be continued. Since 
I like Frank. Guess the author is a bit butt hurt he’s dropping facts.
GC has resorted to this level of clickbait?