Tax Policy Debate: Who has it right? Flat tax, Trump or Other. In this month's #TaxBuzzChat, we hosted the great debate over Tax Policy. It was definitely an interactive and engaging topic. We had the opportunity to chat with industry leaders, tax experts and small business owners and get their thoughts on tax policy, tax cuts and many other hot topics surrounding the tax space. Here are some of the questions we covered in today's debate:
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Do you expect the tax cuts will be reversed in the next 2-4 years?
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What are your thoughts on the government using tax policy to change human behavior? Ex: Sin taxes on soda drinks, cigarettes, gas, etc.
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With roughly 50% of the US population paying zero income taxes, do you believe everyone should at least pay something to have skin in the game?
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Will the deficits from the tax cuts cause economic harm in future years?
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Should the government eliminate death taxes?
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If you were in charge of setting tax policy, what would it look like?
These are just a few of the questions the pros discussed and debated in today's very active live Twitter chat session.
We know how busy everyone is, so thank you to everyone who took the time to participate! Be sure to check out the highlights of the chat below.
Q1. What is the best tax policy and why? Ex: Flat. VAT, Progressive, Etc#taxchat #taxtalk #TaxBuzz #taxpolicy #TaxBuzzChat pic.twitter.com/ANaLGvysk4
A1. Personally prefer a reasonable progressive. Consumption and flat are often hard on the poorest people, but I don't desire an extremely progressive tax, either.
Seeing some buzz on the progressive consumption #tax. A incentive to #save and progressive rates. #TaxBuzzChat
A1: Straight to the punch! Not a fan of flat, just not sure it spreads the money equally across the services the Gov't provides. But with that said, politics make the others kind of unfair as well. #TaxBuzzChat
A1: Progressive taxes seem best when you factor in the ability to pay in order to generate the revenues governments need to provide the services citizen require. #TaxBuzzChat (1/3)
A1: Cont'd – flat taxes are best for simplicity and ease in compliance. However, these can easily become overly burdensome for the lowest income levels. #TaxBuzzChat (2/3)
A1 Cont'd – When weighing the government's need for revenue with the citizen's ability to pay, I prefer a progressive tax. The important details are in the structure of the progressivity. #TaxBuzzChat (3/3)
#taxbuzzchat Interesting discussion. Personally, I think a nice, fair, flat tax, taken right off the top without deductions would be the fairest.
#taxbuzzchat With a flat tax, people wouldn't have to chase b-s deductions they don't need (or lie about personal vs business).
Q2. Do you expect the tax cuts will be reversed in the next 2-4 years? #TaxBuzzChat #TaxCut pic.twitter.com/PopaXSrE7o
A2: I don't think we'll get a reversal. However, we will get tweaks and the extent of the tweaks will depend on the outcome of the midterm elections. Especially related to itemized deductions and Sec 199A. #TaxBuzzChat
Re: A2. Definitely interested in seeing what happens with tweaks. #taxbuzzchat
A2: I don't see tax cuts being reversed. #TaxBuzzChat
Q2. I do not expect that the tax cuts will be reversed in the next 2-4 years. Changed? Yes. How will depend upon upcoming elections. In addition, the "tax playing field" needs to be changed to be fair. Not permanent for corps and temporary for others. #TaxBuzzChat #BeAnAdvocate
A2 I don't see a reversal happening. Changes, yes, most likely!
A2. Certainly if the demographics of #Washington change in the mid-term it could be even sooner than 2-4 years. Both ends of the spectrum are active in DC and will seek their position to be legislated.#TaxBuzzChat #Taxpolicy
A2. The House Ways and Means committee just introduced tax reform 2.0, which includes making the cuts permanent. However, analysts don't believe there will be enough votes to make the changes permanent. #TaxBuzzChat #taxcut #TaxPolicy
A2 (cont) Depends upon who will be occupying #WhiteHouse after the next Presidential election and whether the current policies continue to fuel economic growth. #TaxBuzzChat #taxcuts
A2: Not reversed (not enough votes), but they will be adjusted with technical corrections and IRS guidance, plus our buddies the extenders! 😉 #TaxBuzzChat
Q3. What are your thoughts on the government using #taxpolicy to change human behavior? Ex: Sin taxes on soda drinks, cigarettes, gas, etc. #TaxBuzzChat #sintax #taxchat #taxtalk pic.twitter.com/aaif5Yr6MW
A3. I don't like using #tax policy to regulate social behavior. And all too often, it's a revenue-raiser masquerading as social policy.
So, honesty is key. That said, if you're going to do it, do it right. Studies show #sintax needs to be high to effectuate change.#TaxBuzzChat
And not isolated to a city limit. Too easy to drive a few miles to beat it. And most cities have had mixed or poor results to what they have promised. Ex: #Philadelphia #TaxBuzzChat
Exactly! #TaxBuzzChat
A3: Gov has always used tax policy to change human behavior. I would much rather reward positive behavior like charitable contribution deductions rather than punish negative behavior like sin taxes. #TaxBuzzChat
You always have the best answers. #TaxBuzzChat
Thanks! I would put you up at the top, too! These are fun!
A3. They do change behavior. But often lead to underground economies and people moving businesses outside city lines. So is the hassle worth the lower or small tax receipts. #TaxBuzzChat
I guess the hassle factor is based on how much encouragement is really needed and how much it can be influenced by tax policy.
A3. If there's one thing I've learned by writing about excise taxes at @BloombergTax, it's that people can and will smuggle alcohol and cigarettes into high-tax jurisdictions from low-tax ones. Ex. https://t.co/PGZ6X3eukH #taxbuzzchat
A3 In general, I do not like the government to use #taxpolicy to change human behavior. It is not their role to be the "parent"- this is intrusive and abusive. Forcing employees to "opt out" of mandatory 401K enrollment is a good example of what not to do. #TaxBuzzChat
A3: Crazy to me when I was taught this in school. Still crazy to me now. #TaxBuzzChat
A3: In moderation it doesn't bother me (cigarette tax - meh, whatever). But where do you draw the line: cake tax? Also think that it doesn't work on a local scale. People just go outside the city....
If they ever come up with a cake tax, I'll go bankrupt. #taxbuzzchat
A3. Are they really sin taxes? They also help to cover the financial costs these items inflict on government. For instance medical costs from smoking, I know, my Mother died from emphysema caused by a lifetime of smoking and #Medicare covered the cost of her care #TaxBuzzChat
A3. It is evident that through the #tax system you have the greatest opportunity to change human behavior. Whether it is #Energy Credits, #Education Credits or even #SolarPower, the tax system has proven an effective way to change behavior. #TaxBuzzChat #TaxPolicy
A3: I don't like using taxes to change behavior; people should be free of government interference there, plus it never works out the way they think it will. #TaxBuzzChat
Q5. With roughly 50% of the US population paying zero income taxes, do you believe everyone should at least pay something to have skin in the game? #incometax #TaxBuzzChat #taxes pic.twitter.com/QC8D7ZfJE7
A5 The Earned Income Tax Credit not only helps low income earners pay no federal tax, they receive additional money to help lift them out of poverty. I am not saying that I am an advocate-just this will not change- "no skin in the game" for all. Pockets are empty. #TaxBuzzChat
I think refundable credits like this should be moved to a welfare system so they actually go to the people who NEED them most. Just basing off taxable income isn't targeted enough.#TaxBuzzChat
A5. Paying tax doesn't necessarily equal skin in the game. There are many careers that may pay lower wages (and maybe result in no federal income tax payable) that still contribute to the collective good of the country (teachers, military, etc.). #TaxBuzzChat
A5: This gets debated in our office all the time and we've come to the conclusion that yes, everyone should have skin in the game. However, if you take into account other taxes (sales & employment) everyone is contributing something. #TaxBuzzChat
A5: Haha, just heard @DaveRamsey talk about this on one the radio.
Of course I believe everyone should pay a local, state and federal tax to have skin in the game! And this could be a flat fee, just like amusement parks. It's just one big ride anyway. #TaxBuzzChat
A5: Yes, I do think everyone should have skin in the game. I'm not a fan of a tax policy that gives people larger "refunds" than what they have paid in. (i.e. EITC and refundable CTC)
A5: Everyone already does. State income tax. Property tax. Excise Tax. Sin tax. Sales Tax. Employment Tax. VAT. The list goes on. Why does reform continue to focus on the one progressive tax we have in this country? If anything even less people should pay Fed Income Tax, not more
A5. Appreciation and value come in knowing you contribute. If one does not pay taxes but has the same privileges there is often not the same appreciation or value for the privilege.#TaxBuzzChat#incometax #TaxPolicy
A5. We should have a graduated tax system, taxing the well to do more heavily. Everyone should pay something even if very small. Trouble is #Congress has seen fit to mix our tax system w/ the welfare system (EITC, CTC, Savers Credit) clouding the issue of fair share #TaxBuzzChat
A5: I don't feel the poor should have to pay income taxes; they are already paying sales tax on many items, so they have skin in the game. I also think that some of the tax credits for the poor get out of hand and abused, so that should be looked at. #TaxBuzzChat
Q8. Will the deficits from the tax cuts cause economic harm in future years? #TaxBuzzChat #TaxCut pic.twitter.com/bJLXCFDfa4
A8. No idea on harm. But the beginning of 2018 saw a large increase in individual and overall tax receipts. But something will have to give with the growth of entitlement programs. #TaxBuzzChat
A8: I don't think *harm* is the right word but it will make it difficult for the gov to provide services, and it will make politics more toxic in the future. #TaxBuzzChat
Q8 #taxbuzzchat Sadly, I think the deficits from the tax cuts will cause economic harm. 1 - losing safety nets and 2-paying interest on the debt loans.
A8: I still believe in Adam Smith's "Invisible Hand," and a free market. I like to think that the market finds its own balance. But only time will tell. #TaxBuzzChat
I truly hope not. I think if gov't spending is kept in check, it will all be ok. But....well, politicians!
A8. Income taxes are not the only taxes, the govt has all sorts of other taxes including excise taxes on just about everything & if the income tax cuts spurs the economy the government will benefit from other taxes and also increased income taxes. Only time will tell #TaxBuzzChat
A8. No, as the economy improves the deficits will decrease, that is, if #Congress does its job and balances the budget. They should do what every #taxpayer has to do - live within their means. #TaxBuzzChat#TaxPolicy
#taxbuzzchat Deficits always create problems - but sometimes the problems are contrived. Time to focus on generating more revenues for businesses and more jobs for people, not robots
A8: Well C Corps and passthroughs are getting tax reductions and about 90% of the people I planned for this year are getting tax cuts. Of course all of these savings are going to inflate the budget deficits and will put an economic burden on our kids and grandkids! #TaxBuzzChat
Q9. Should the #government eliminate death taxes? #TaxBuzzChat pic.twitter.com/HWqsLraXh7
A9: I'm not against death taxes, but it seems like the people who are most targeted by this are already using tax methods to avoid the tax. It ends up hitting people who aren't wealthy enough to plan for it. #TaxBuzzChat
A9: I'm not against death taxes, but it seems like the people who are most targeted by this are already using tax methods to avoid the tax. It ends up hitting people who aren't wealthy enough to plan for it. #TaxBuzzChat
A9. They virtually have with 11.2M exclusion, but yes. You paid #taxes on it when you earned it - appreciation wasn't your fault, you were just along for the ride. #TaxBuzzChat
A9. I have mixed feelings of the issue. There certainly should be a very high threshold but I think the super wealthy should be continue to be subject estate taxes. Perhaps set the exemption to 50 million or so inflation adjusted #TaxBuzzChat #TaxPolicy
#taxbuzzchat A9. Frankly, at this point, that discussion should stop. They should focus on things that affect middle income taxpayers - like restoring employee business expenses and casualty losses
A9: Yes, the #government should eliminate #death #taxes. Many taxpayers do not know about them anyway and are shocked to learn about them. If not eliminated, they should be made more fair. Too complicated & expensive. Form 1041 leads to new IRS service challenges#TaxBuzzChat https://t.co/4MTAzxhzsG
Q11. If YOU were in charge of setting #taxpolicy, what would it look like? #TaxBuzzChat #taxtalk #taxchat #taxes pic.twitter.com/BJfzc0cOrB
A11. Trick question! We *are* in charge of setting #taxpolicy - only Congress seems to have forgotten that part.#TaxBuzzChat
If only that were true. When was the last time the Senate Finance Committee asked you for advice (we are sure they read your column, though)
Haha! I wish!
A11: My priority would be to focus on revenue needed, then spreading the collection of the revenue across the population in a manner that is equitable based on ability to pay. #TaxBuzzChat
A11: Why I will never be allowed to set tax policy! #TaxBuzzChat pic.twitter.com/tN6zjMD56N
#TaxBuzzChat Q11 I think the biggest change I would make would be to take the "social engineering" out of the tax code. Everyone is taxed individually, eliminate all dependents, child tax credits and EIC.
A11 Can I be in charge of spending, too? :) I like the response of @cbriancpa with an emphasis on revenue NEEDED. Spread burden on all with consideration of ability to pay in the equation, as well as leaving enough as an incentive to earn more for all.
A11. As much distain as I have for the current AMT, I would structure a tax system based upon household income, not taxable income with deductions or adjustments for reasonable housing costs, state income tax, medical, charity, large casualties, and family size #TaxBuzzChat
A11. Wow, great idea. Budget a lean, mean government machine, accomplishing the 5 most important things to #taxpayers and assess taxes based on a flat tax - Probably have an enormous surplus.#TaxBuzzChat#TaxPolicy #taxtalk
— Beanna Whitlock (@beanna_whitlock) August 1, 2018
As always, it's great to know that participants are enjoying our monthly chats and getting valuable insight from tax experts, industry leaders and small business owners. We love hosting and bringing together the tax and accounting community!
Thank you so much! This is such a fantastic opportunity to talk #tax with some seriously smart folks.
So crazy how fast these things go buy.
Thanks @JoannTaxBuzz, @cbriancpa, @bstonercpa @TaxMama. @taxgirl, @DebFoxFinancial - wish there was time to read all of your responses and converse with each of you about your ideas. #TaxBuzzChat
I know, we could have gone on the whole day! Now I have to go back and read the responses I missed. Wow this went by really fast!
Thanks @taxbuzzonline & @JoannTaxBuzz for hosting another fun #TaxBuzzChat!
Thanks, again, for hosting and for creating provocative tax questions. Fun as usual. I look forward to reading the recap and learning from TaxPros around the U.S.#TaxBuzzChat
— Deborah Fox, CPA (@DebFoxFinancial) August 1, 2018
We had a great time chatting with everyone on such hot topics. A huge thank you to all who make the time every month to join us. We love our “regulars”! And thank you to the new faces that joined in today. Feel free to use our #TaxBuzzChat hashtag or tweet us at @taxbuzzonline if you have any additional questions you'd like answered.
We'll be hosting #TaxBuzzChat the first Wednesday of every month at 10am PT/1pm ET for our monthly discussion on all things tax and accounting. Hope you can join us in September!
TaxBuzz Staff
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