Gwen Martin

3 years ago
The elimination of some of the corporate income tax reporting complexities, such as the depreciation schedules and inventory accounting, is a positive consequence of this proposal. I wonder, however, how the proposal addresses the increased complexities for individual income reporting. Specifically, adding a tax on the value change of a share, either by averaging the share value or some other method, creates an extra burden on individuals, and I would argue puts the greatest burden on the “little” investor who cannot afford to hire an accountant. I realize that many shareholders are wealthy and already employ professional help, but I worry that some of the smaller shareholders would no longer invest. I can also imagine that larger shareholders could afford to “play” the market to move around stocks to minimize the net value increase or otherwise find the “loopholes” to maximize benefits. Under the current tax code, at least the playing field appears more level when corporations alone are in the game.

Furthermore, I can imagine the stock market itself being affected by the new tax laws. For example, in order to moderate the affect of a “value” tax, the tax value of a stock might be calculated as an average of 10 years. If this is the case, won’t investors consider both this average and the current market value of the stock? How will this added consideration impact the buying and selling of stocks overall? Wouldn’t smaller investors be at a disadvantage for buying stock in any company that is “taking off” if the investor has to be prepared to pay taxes before having the profit in hand? (This is a fairness question for everyone in the new system, especially if they buy stock early in a highly successful company’s entrance into the market.)

However, the proposal to make the rates paid graduated instead of a set amount, making the system more progressive, has many merits. I also think that its equal treatment of all types of businesses, thus discouraging becoming a pass-through business, makes a lot of sense.
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3 years ago
The elimination of some of the corporate income tax reporting complexities, such as the depreciation schedules and inventory accounting, is a positive consequence of this proposal. I wonder, however, how the proposal addresses the increased complexities for individual income reporting. Specifically, adding a tax on the value change of a share, either by averaging the share value or some other method, creates an extra burden on individuals, and I would argue puts the greatest burden on the “little” investor who cannot afford to hire an accountant. I realize that many shareholders are wealthy and already employ professional help, but I worry that some of the smaller shareholders would no longer invest. I can also imagine that larger shareholders could afford to “play” the market to move around stocks to minimize the net value increase or otherwise find the “loopholes” to maximize benefits. Under the current tax code, at least the playing field appears more level when corporations alone are in the game.

Furthermore, I can imagine the stock market itself being affected by the new tax laws. For example, in order to moderate the affect of a “value” tax, the tax value of a stock might be calculated as an average of 10 years. If this is the case, won’t investors consider both this average and the current market value of the stock? How will this added consideration impact the buying and selling of stocks overall? Wouldn’t smaller investors be at a disadvantage for buying stock in any company that is “taking off” if the investor has to be prepared to pay taxes before having the profit in hand? (This is a fairness question for everyone in the new system, especially if they buy stock early in a highly successful company’s entrance into the market.)

However, the proposal to make the rates paid graduated instead of a set amount, making the system more progressive, has many merits. I also think that its equal treatment of all types of businesses, thus discouraging becoming a pass-through business, makes a lot of sense.
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