Youthful Optimism

As recently as three years ago I was ready to take on the problem of tax complexity with a vengeance. Oh, the beauty of youthful optimism.

After frustrations and disappointments, I like to think I've come to a place of acceptance. What is the motto for AA? "God, give us grace to accept with serenity the things that cannot be changed,...courage to change the things which should be changed,...and the wisdom to distinguish the one from the other."

The monster of a tax code (Obama's words, not mine) is not going to get simple any time soon. And I can't change that. So where am I focusing my efforts now? On helping clients navigate the system as it is, mess that it is. On helping teach staff how to be an effective tax practitioner. Basically, I'm working where I believe I can make a difference.

Not sure whether that includes blogging here or not, as there are so many outstanding tax bloggers already covering the world of tax. I follow their blogs, and thoroughly enjoy doing so. Dan Meyer, for example, gives a nice brief synopsis of the last minute tax extender bill making its way through Congress. These extender bills are most definitely a symptom of the problem of a Congress than can't make real tax simplification a priority.

Perhaps there will be some real simplification after the election, whichever way it goes, and I'll be able to post a "hallelujah" post. Hey, a girl can dream.

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Military Thoughts

Thanks to the Tax Girl for her piece Tax Tips for the Military on Memorial Day. My husband heads overseas in a few weeks for a six-month tour with the Air Force, and I appreciate everyone thinking of the military this past weekend.

I look forward to announcing my husband's safe return around the start of next tax season!

And thank you Kay, as well! ... Memorial Day remembering, planning

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Work in Progress...

I'm going to say this blog is a work in progress, where the term "progress" has a very loose meaning.

As I explain over at my less technical (i.e. more "touchy-feely") blog, I'm going to be on blog hiatus for awhile, as my husband will be serving overseas with the Air Force.

I often note that I won't be perfect until my next life, so I guess that applies to my blog too. Here's to another life with a perfect blog!

Good luck with tax season!

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And so it begins

Spending a beautiful Friday afternoon with four kids running around (only two are mine), I took a moment to check Twitter chatter, and was excited to read (via @taxtweet) "Obama tax reform panel report released." (I realize I am odd to find the news exciting, but accepted my oddity years ago.)

The report arrives 8 months past the original deadline.

Kay Bell and Professor Nellen give us their first impressions, Professor Nellen writing: "This 126 page report does not include recommendations but instead in an analysis of a variety of proposals that have been made by various groups in the past with a brief explanation of advantages and disadvantages of each. So, really nothing new."

I think Professor Nellen is correct that this report doesn't present anything new. I do hope it gets some kind of political attention, and that it gets dialogue started. The preface notes that: "The Board gathered information from business leaders, policy makers, academics, individual citizens, labor leaders, and many others."

There are a lot of smart people with a lot of good ideas, and I'm glad we're at least attempting to gather the ideas in one place.

The introduction to the summary of alternatives for simplification includes this comment: "The complexity of the tax code is partly the result of the fact that new provisions have been added one at a time to achieve a particular policy goal, but with inadequate attention to how they interact with existing provisions."

I liken the tax system to a medical patient who is prescribed a new medication for each new symptom, without being effectively treated as a whole.

Some wish the panel had been allowed to consider broader reform. "We received many suggestions for broad tax reform, and some members of the PERAB believe that such reform will be an essential component of a strategy to reduce the long-term deficit of the federal government. But consistent with our limited mandate, we did not evaluate competing proposals for overarching tax reform in this report."

As much as I believe broad reform is needed, I'm starting to accept the hard reality that people struggle with big change. (I enjoy reading some of the research on change.) If the alternatives are to start with small change or to debate broad reform that doesn't lead to any reform, I'll take the small change, with the hope of building change momentum.

One big change that is listed as an alternative (on page 50) I support wholeheartedly: Repeal the AMT!

I look forward to reading others' thoughts on the report...

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Caution is the better part of valor... sometimes

Back in Ohio, we used to pass a street sign each week that said: "Right turn with caution." (Which was probably safer than "Right turn with abandon.")

My impression is that accountants are a cautious bunch. We like to look before we leap. When we learn in the news of a disaster that could have been avoided with more safeguards, we point to it and say: "See, that's why we need to be careful."

For example, Key Bell shares a report of Donald Bren's $1.4 million federal tax refund stolen by an ID thief. She writes: "While Bren and others at his rarefied income level are an identity thief's dream target, any of us can become victims."

Kay is (as usual) absolutely correct.

David McClure recently wrote on CPATechViews:

I have dropped out of FaceBook, don’t Twitter or Tweet, and refuse to give real information to any web site. And I wipe my cookies and tracker caches every single night. Because I do not want to let advertisers know who I am, where I am or what I am thinking about. That may seem extreme, but you should consider it as well. I’m a pretty stable guy, not a privacy lunatic by any means, but I am scared.

And so as with all things in life, we find ourselves dealing with the gray area. I understand McClure's position, and at the same time am not taking the same position. Perhaps I am setting myself up for trouble by staying active online. But I keep thinking of the Spanish proverb quoted in one of my favorite movies ("Strictly Ballroom"):

"A life lived in fear is a life half lived."

I'm not about to go sky diving or anything, but I'll stick around on Twitter, and hopefully not have my tax refund stolen. (To any ID thieves out there: there's not a whole lot of money to be gained from swiping my name.)

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Dealing with the gray

Joe Kristan writes an interesting post today, discussing a truth that sometimes gets lost in the shuffle: when it comes to the sources of wealth, "It's not just luck."

My client base is made up of of people that are "rich" by Geithner standards. They are small business operators who have achieved a little success in their S corporations and partnerships, generating enough taxable income to put themselves in the top tax bracket. They have had some luck, or at least not catastrophic bad luck, but as a rule they also work very hard. Many have taken huge chances, and some lost almost everything before they finally achieving some success.

As I mused last year, I too am not a fan of blanket statements about the "rich." There are good, hardworking people all across the socioeconomic spectrum. I believe that neither wealth nor poverty is solely a product of luck.

In this world of gray, we as a people somehow have to figure out how to deal with the outliers: the idle rich and the helpless poor. I grow frustrated with the flawed logic that often appears: that all poor people are poor through no fault of their own, that all rich people are lazy and lucky. Some poor people earned their poverty through bad choices; some rich people really did earn their wealth.

An equally flawed logic exists that a purely free market would solve everything. While I'm a firm believer in the invisible hand, I also know that we must address externalities.

Upon mentioning my belief in capitalism, I expect to hear: "of course you support capitalism, it works for you." It's unfortunate that people often attack an argument by attacking a person's motives. The reality is, I'm nowhere near the "rich" levels by Obama standards. My husband has just completed his medical residency, and I've limited my working hours for the past 7 years (since my daughter was born).

I'm the first to admit I've been fortunate. I've also worked hard to take advantage of every opportunity that has come my way. True greatness requires hard work. A lot of wealthy people have worked and sacrificed for what they have.

I hope we can spend less time casting blame, and more time collaborating toward a real solution.

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What did I miss?

It's a gorgeous day here in the S.F. Bay Area, where we've successfully relocated for good. It's good to be back home.

Moving across the country with two small children was an adventure, to say the least, and quite time-consuming. The most painful part was going to the DMV. (Thankfully, I passed the written driver's license test, missing only one. I was nervous when I got to the question about the legal blood alcohol level. I have no idea! I don't drink.)

I'm quite behind on my reading, but am enjoying catching up. I was happy to read that the tax extender bill with the punitive S corporation provision didn't pass. (Covered by such esteemed bloggers as Joe Kristan, Kay Bell, Tax Girl.)

I wonder what interesting tidbit I'll read about next? Hopefully I can get caught up to real time... at least by Christmas.

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