20 Reasons the Tax Code Needs to be Simplified

20 Reasons the Tax Code wBecause the U.S. tax code is the most complex in the world by any measure, we here at Depreciation Guru have been beating the drum for simplification for a number of years.

Robert W. Wood from Forbes says “It is chock full of perks to special interests, political pork and social engineering. Like a hodgepodge built with spare parts and constant add-ons, some of the results it produces are pretty unjust.” Here is a list of his 20 favorite “Really Stupid Things In The U.S. Tax Code”.

  1. In 1913, our whole tax law was 27 pages. It’s now over 4 million words, 9,000 bloated pages.
  2. Complying with the tax code costs immensely. Individuals spend 6.1 billion hours a year doing their tax filings.
  3. Many Fortune 500 companies manage to pay zero tax or get refunds in some years, and many claim billions worth of tax breaks.
  4. Many individuals pay nothing. Of 145 million personal tax returns in 2011, 54 million (more than a third) had zero tax liability or got refunds.
  5. 1,600 people who filed tax returns with incomes of $1 million or more paid no income taxes.
  6. The Earned Income Tax Credit is plagued by fraud, up to 29% of all payments. The IRS paid out $125 billion in fraudulent refunds in the last 10 years.
  7. Many tax giveaways don’t benefit the intended recipients anyway. The New Markets Tax Credit was meant to create jobs in low income areas, but instead steered nearly $1 billion to wealthy investors and Wall Street banks.
  8. Using names like “Find the Children,” “The Veterans Fund,” and “Cancer Fund of America,” the 50 worst charities in America raised $1.3 billion in donations over the last 10 years. Almost none of this money benefited missing children, wounded veterans, or cancer patients.
  9. Many tax-exempt charities give little to their cause. For example, Lady Gaga’s Born This Way Foundation raised $2.6 million in 2012, but only gave away $5,000 for grants to organizations or individuals.
  10. The alternative minimum tax (AMT) is a complex parallel tax system that has grown like cancer. It’s results are hard to predict and can be perverse.
  11. Billions in tax breaks go to wealthy professional sports team owners, who can count their player rosters as depreciable assets.
  12. A Tuna Tax Break provides millions to corporations operating in American Samoa.
  13. Prostitution is illegal almost everywhere, but Nevada’s Mustang Ranch writes off free passes as a promotional expense. Workers claim business deductions for breast implants and costumes.
  14. Tax credits for historic structures cost $1 billion annually, subsidizing beach front resorts, Major League Baseball stadiums, and luxury hotels.
  15. Wealthy hedge fund titans get a “carried interest” for their work. Their pay looks like wages but is taxed at capital gain rates.
  16. U.S. corporate tax rates are the highest in the developed world. To avoid paying them, big U.S. companies keep their income abroad. Americans lose out on all that capital.
  17. Unlike big companies that can avoid U.S. taxes on money stashed overseas, U.S. persons living abroad have to report and pay U.S. tax globally.
  18. The tax exclusion for parsonages lets clergy members get tax-free housing but the exclusion can be abused. Some clergy double dip, claiming the exclusion and the mortgage interest deduction.
  19. As sovereign government entities, Native American tribes don’t pay corporate income tax. Ditto for corporations wholly owned by a tribe.
  20. Despite millions in profits and revenue, the NFL, NHL, and PGA Tour are classified as non-profits, exempting their earnings from federal income taxes.

Read Full Article Here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

Federal Tax Depreciation Detail with Bonus Report

The Federal Tax Depreciation Detail with Bonus Report shows a “snapshot” of your fixed assets as of the end of the selected accounting period.  This means all the numbers presented reflect their true value at the end of the period. Here is a sample image of this report:

Federal Tax Depreciation

The columns of this report include:

  • System Asset Number
  • Service Date
  • Depreciation Method
  • Life – Years and Months
  • Purchase Price
  • Section 179 deduction
  • ITC Amount
  • Bonus Depreciation
  • Depreciable Basis
  • Prior Accumulated Depreciation with date
  • Period Depreciation with Begin and End dates
  • Total Accumulated Depreciation with date
  • Net Book Value

The Depreciable Basis is calculated by taking the Purchase Price and subtracting any Section 179, ITC Amount and Bonus Depreciation. All Prior, Current Period and Total Accumulated Depreciation amounts are then computed based on the Depreciable Basis. Net Book Value is determined by reducing the Depreciable Basis by the Total Accumulated Depreciation through the end of selected reporting period.

This report is very useful in determining the total amount of any special depreciation or section 179 deductions in the selected year since it breaks out them into a separate columns from standard depreciation. The report can be run in summary or detail with filtering if necessary to display critical depreciation amounts for your organization.

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can register for our live webinar, download a free evaluation copy and get a personalized pricing estimate.