Wednesday, February 26, 2014

WHO’S TO BLAME?

One of the things that I have enjoyed about helping to manage our business for 29 years is that there has never been any blame cast for bad decisions.  Even though all major decisions are voted on and therefore are approved by a majority of the owners; the truth is that most ideas originate with only one of us and therefore blame could be directed to someone if the idea does not work out.  But blame has never been part of our business culture.  I can vouch from personal experience for the advice that you should never engage in blaming one of your business associates for a decision gone bad.  Once the decisions are made, see yourselves as all equally responsible for the success or failure of that decision.  Learn from your mistakes, but do not blame anyone for them.

Blame has at least two very bad consequences.  The first is bitterness.  Both the person who thought up the idea and the ones who went along with it will be bitter if blame is cast.  The person who thought up the idea will be bitter at being blamed, and the other people will be bitter that their time or money has been wasted.  The second bad consequence is the tendency to stop initiating new ideas if there is a risk that you will be blamed if the idea does not work out.  Either way, the company loses. 

The best plan is to resolve to be equally responsible for all decisions, good or bad, no matter who originally came up with the idea.  That way no one will become bitter and the ideas for new decisions will keep coming.

Loren L McCann, CPA, MS (Tax)

Wednesday, February 19, 2014

ON TAX COMPLEXITY


I was recently asked a tax question regarding the proper reporting of a certain employee benefit paid to a nonprofit entity’s employee.  I gave the correct answer to the nonprofit’s treasurer and thought that was the end of it.  The answer that I had given was not liked by the employee it affected, and this opened a dialog between the treasurer, the employee, another tax preparer, and a fourth party that was the supplier of the particular employee benefit.  Most of the controversy arose because of a difficulty of defining the question to be answered.  The employee, the other tax preparer, and the benefit provider were each answering different questions because the persons asking the questions did not know enough of our complex tax system to even ask the right question.  I believe this helps to demonstrate that our tax system has become much too complex.

Any good tax system should be, at the very least, one that those being taxed can understand.  Recently we had to tell our clients that we could no longer give any kind of an estimate of their taxes owed without inputting their information into our computer.  There are now so many provisions that are phased in at different income levels, and that are subject to special and peculiar limitations, that it is nearly impossible to make an intuitive guess as to potential tax liability.  When a person is unable to visualize even an approximation of their tax consequences of a contemplated action, it is very hard to make everyday economic decisions.  The result of this kind of complicated tax system is a mix of anger and indecision that is bad for our economy.

It is time that we all expressed our concern to our elected representatives.  We are tempted to think that we are powerless to evoke a positive change in our system, but my experience is that our elected representatives do listen to what we say, and that it takes a relatively few contacts to influence their thought.  From a few hundred to a few thousand contacts will often be enough to get an elected official to act.  When even experienced tax professionals are having difficulty with the complexity of our tax system it is past time to get the system changed.

Loren L McCann, CPA, MS (Tax)

Wednesday, February 5, 2014

READ ALL ABOUT IT


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Sharon Holcomb, EA