Tuesday, July 31, 2007

Accounting Today Editor: Edwards Tax Proposal Not Ready for Prime Time

Bill Carleno, editor-in-chief of Accounting Today, criticized a John Edwards proposal to have the IRS automatically calculate taxes for 50 million Americans and send them either an invoice or refund for difference in tax owed and taxes paid (through withholdings or estimates). Apparently, Edwards is concerned about taxpayers having to "pay preparers to help with taxes."

Carleno has done a good job of finding flaws with the Edwards approach: the expectation that government employees would be more effective than licensed private preparers, the belief that the IRS somehow would become cutting edge in IT applications and that somehow this approach would reduce the "tax gap." Another prolem or two: for low-income taxpayers--the ones with the most to gain from a government-based tax preparation system--the IRS-run VITA system already provides FREE tax assistance; also, the plan does not in any way appear to address the complexity of the present IRC and associated regulation. Assuming that government-employed preparers would provide improvement over licensed private preparers in dealing with the present tax code is at best highly optimistic.


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