Legislative / Regulatory | Taxation | Technology & Social Media

Debate over ‘outdated’ tax system on horizon

Capitol If you thought the fireworks over health care reform have been fun, you'll probably love the coming debate over tax reform.

To me, the issues are remarkably similar: Everyone agrees that changes are needed, but nobody agrees on which changes to make. Cue the partisan lightshow.

Word is that lawmakers could start talking about possible changes to our tax system as early as January, but the AICPA isn't waiting that long.

In testimony before the President’s Economic Recovery Advisory Board, AICPA President Barry Melancon called for impactful reforms that include simplifying the alternative minimum tax and comprehensive changes to the estate and gift tax system. The MACPA offered similar testimony to the Maryland Business Tax Reform Commission earlier this year.

“The dynamic American economy is rebounding slowly and, we believe, is burdened by an unnecessarily cumbersome and somewhat outdated income tax system," Melancon told the committee. "In particular, we see significant problems for small businesses arising from the increasing complexity of the tax law."

In a report titled Tax Reform Alternatives for the 21st Century, the AICPA says any meaningful tax reform has to take into consideration the following issues:

  1. The financial impact that the coming wave of baby boomer retirements will have on our economy.
  2. The expiration of the 2001 and 2003 Bush tax cuts.
  3. The increasingly unfair impact of the AMT on America's middle class.
  4. The recession's negative impact on federal tax revenue.

Read the AICPA's report in its entirety.

This debate is going to be interesting, to say the least. We've said it before, but it's worth repeating: Tax reform is an area in which CPAs have a certain amount of expertise. Sharing that knowledge with lawmakers will help them make informed decisions ... and keep unintended negative consequences to a minimum.

Learn more
Follow the latest tax-related developments at our 2009 Advanced Tax Institute, slated for Nov. 2-6 at Martin's West in Baltimore. Get details and register here: Day 1 | Day 2 | Day 3 | Day 4 | Day 5

You'll also get a debriefing on recent tax developments at Tom Hood's professional issues updates. Get details and register for an update here.


Bill Sheridan