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View Diary: Want to Reduce the Deficit? Start by Funding the IRS (81 comments)

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  •  That'd be like the Wild Wild West. (6+ / 0-)

    Huge sections of the code define income and attempt to force current recognition of assets over which there's some sort of constructive receipt or effective control).  Get rid of those swaths of the code and people would game the hell out of the system.

    Which is to say: a simple tax is an easy one to avoid.

    •  The more people understand the vagaries (4+ / 0-)

      of the tax code, the more they realize the necessity of such a long code. We already have the 1040EZ for individuals or families with simple line items. But GE? An int'l business that is both a manufacturer and a financial services firm? How could someone even think that a simple few pieces of paper could clear up any and all ambiguities?

      •  For example, depreciation deductions. (1+ / 0-)
        Recommended by:
        Lujane

        Link.  They're a real plus for businesses that want to expand.

        Any jackass can kick down a barn, but it takes a good carpenter to build one.--Sam Rayburn

        by Ice Blue on Thu Jan 31, 2013 at 08:49:11 AM PST

        [ Parent ]

        •  I understand the intent of this but... (0+ / 0-)

          Again, we are using tax payer dollers to subsidize business growth.  The entire purchase cost is deducted from their initial purchase in the cost of doing business and then we allow them to deduct the wear on the asset as well.

          If a company wants a machine, there must be a financial incentive to have it already.  The are going to increase capacity, reduce labor, improve quality, provide a new feature or something.  If it makes economic sense, they will do it.  The depreciation of the asset is an added bonus.  

          It does create an incentive to buy something new as opposed to refurbishing something old but that is like robbing Peter to pay Paul.  Anymore, service contracts are typically local with American workers and new equipment purchases are more likely supporting foreign employment.

          "Perhaps the sentiments contained in the following pages, are not YET sufficiently fashionable to procure them general favour..."

          by Buckeye Nut Schell on Thu Jan 31, 2013 at 09:03:26 AM PST

          [ Parent ]

          •  If an item can be fully expensed for tax (0+ / 0-)

            purposes there no longer is any basis with which one can take further depreciation. Not sure what you are saying about deducting both the upfront cost o the capital item in addition to ongoing deductions.

    •  I completely disagree... (0+ / 0-)

      The more complex you make something, the easier it is to cheat.

      You say:

      "Huge sections of the code define income and attempt to force current recognition of assets over which there's some sort of constructive receipt or effective control). "

      I simply state that all income is subject to taxes, period.  If you get it from work, interest, the lottery, dividends, inheritence, etc...

      Which is easier to game?

      In twenty years of writing ISO standards and standard operating procedures for companies, the secret is to understand what is critical and what is not and say it as clearly as possible with as few words as absolutely needed. (unlike my typical post).

      It is hard to find a loophole in a straight piece of string.

      "Perhaps the sentiments contained in the following pages, are not YET sufficiently fashionable to procure them general favour..."

      by Buckeye Nut Schell on Thu Jan 31, 2013 at 08:33:11 AM PST

      [ Parent ]

      •  Sounds great. (2+ / 0-)
        Recommended by:
        RFK Lives, Roger Fox

        So I'll have a client set up an offshore corporation or mutual fund that invests and makes no distributions, and since he won't receive any income from that entity, he won't have income.  

        And that makes it easy for guys like Mitt to cut down their tax bills: the management fee would just be paid to some intermediary entity, and all their fees grow tax-deferred.  

        •  Touche... (1+ / 0-)
          Recommended by:
          TexDem

          You make a good point, I did not account for it and it would have to be considered.

          However, simplifying the code to extremely basic rather than complicated rules does make it more difficult to get around.

          There are 4,563 words in the US constitution and 5.6 million in the US tax code and associated regulations.  

          One of these has regulated one of the largest and most power governments in the history of the world for over two centuries with very few revisions.  

          The other is changed yearly, is completely riddled with loopholes and injustices and has lead to frequent inequalities in the distribution of wealth.

          Imagine how simple and easy to follow the bible would have been if it simply stated two rules; "Treat others as you would like to be treated" and "Love one another as I have loved you."  

          Simple is always better (as long as all contingencies are accounted for).

          "Perhaps the sentiments contained in the following pages, are not YET sufficiently fashionable to procure them general favour..."

          by Buckeye Nut Schell on Thu Jan 31, 2013 at 11:04:42 AM PST

          [ Parent ]

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