..For example, let’s say “Joe’s†business involves a lot of travel. Can he deduct or “expense†travel expenses? What are the rules, fair rules, for what is allowable or not?
What about depreciation of inventory? Just ignore it?..
And that folks is how you end up with a tax code with more pages than the Bible.
I have to ask. Do you work for H & R Block or have your own tax accounting business? These are the types I believe will not be happy with a simpler tax code.
What makes this work so well is that most of these deductions go away. The tax rate gets lowered and it is supposed to balance out.
I have a couple of things I don’t like about Cruz’s plan. I think that everyone who has income should pay some tax. Everyone should have skin in the game. I also think that if you are going still allow deductions for mortgage interest and charitable deduction you are just asking for more to be added next year and the next and the next until we end up at the same place we are now.
If you disagree with his tax plan fine. You can disagree but do you have to call him a liar?
Twist, twist, twist.
#1: Are you kidding? My preference is for a Federal end user sales tax. THEN you can cut IRS by 90% or more. If you think I enjoy the nightmare of doing my own income taxes for my (very) small business (I can’t afford an accountant, tax lawyer, etc.) you are out of your mind. This is not to mention the power the IRS has and abuses, and that it’s now wrapped up with health care. (Blankety-blank Obama!!!)
#2: I make & fix stuff (physical items). And in the spirit of disclosure, I do help my Mom with her tax returns, for free.
#3: Quote back to me where I said Cruz was a liar. I did not. I said his plan as presented was hopelessly inadequate. It does not address income determination (or definition) in a large variety of circumstances. FWIW, it does not appear to me that anyone else’s income tax reforms are any better in this respect.
#4 “Determination of Income” can be made simpler — it WAS somewhat simpler when I started doing my own business taxes almost 40 years ago. However, it just cannot be made one page simple and yet be fair to everyone, or even most everyone, especially those owning small businesses. Circumstances and situations vary too widely for that to ever happen. For one thing, Determination of Income is often heavily dependent on what I’ll call “determination of expenses”, which is what I was getting at in my earlier post. What expenses are “allowed”? How would you handle a business investing in itself heavily, whose expenses actually exceeded their gross receipts for, say, 2015? Would you tax them the same as the business now on cruise control (pun NOT intended!) that has 1/5 the expenses? The impossibility of making “determination of income” “simple” and still fair is is part of the reason I support a Federal end user sales tax, and elimination of the income tax (at least for earned income.) This, even though someone like me, still(!) sometimes heavily investing in their business, is at a big disadvantage under a sales tax plan (as expenses for equipment and such would not be fully or even mostly deductible.)
Where I do agree with you is that everyone should have at least some skin in the game, and that if any deductions beyond the standard deduction & exemption are allowed under an income tax regimen, more will be added with time.
Now, I have been much more polite here than I should. If you care to respond, you could at least reciprocate.