As I write this blog, we are still heading for the infamous “fiscal cliff” and we are just a few days now from the start of a new year. Will Congress and President Obama find a way to reach an agreement before the end of the year? Who knows? I have pretty much given up hope of seeing any rational activity out of our elected leaders. It’s actually sort of sad.
On the bright side, I am thankful that within the CPA profession we have some young people on their way up who can think and act rationally. An example of this is the team of students from the University of Texas at Dallas who recently won AICPA's 2012 Accounting Competition, beating out a host of teams from other schools around the country. Teams from UT-Dallas have won this national competition before, so it is clear that this university is producing some real accounting “winners” in north Texas. More information about the competition is available at this link: https://community.thiswaytocpa.com/competition/cc/2012_aicpa_accounting_competition/default.aspx.
This year’s AICPA competition, which started several months ago, focused on the U.S. presidential election that was coming up in November, and the student competitors were asked to assume that they had joined a team running an election campaign for the next president of the United States. Their task was to help develop their candidate’s proposed solutions to address current issues. In the case of the UT-Dallas team, they chose tax reform, and they developed some specific proposals for how to make the tax system more effective and efficient.
You can watch a short video where the students present their ideas here: https://community.thiswaytocpa.com/competition/cc/2012_aicpa_accounting_competition/teamdashboard/496.aspx.
The title of the entry from the UT-Dallas team was “Working Capitol.” In their entry, they outlined ways the current tax system could be improved by making the tax code simpler and easier for taxpayers to understand. Their plan also would raise more tax revenue.
At the heart of their proposal was a call for a 5 percent value-added tax that would apply to the gross profits of businesses. They estimated, based on statistics from the IRS, that this would raise an additional $440 billion in revenue each year. They would couple with this new value-added tax the elimination of the corporate income tax, which would reduce tax revenue by an estimated $181 billion. They also proposed lowering the individual income tax rates that apply to all individuals and joint-filers. Those whose gross income falls below $50,000 a year would pay no income tax at all.
They would limit the home mortgage deduction and charitable contribution deductions for higher income filers to 23 percent and would have the long-term capital gains tax rate set at one-half of the marginal rate of the taxpayer based on income.
When all of the details of their proposal are factored in, the new system would raise an additional $330 billion for the government. They also propose that the changes stay in place for at least five years to allow taxpayers and businesses to plan for the future.
While one can always argue about the details of the UT-Dallas team’s proposal, you cannot argue with their willingness to develop a plan to reform the current tax system in a rational and straightforward manner. Now if we could only get our elected officials to follow their lead.