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13-Mar-2014

Tax implications bring perplexities


Early in my career, I worked at a small CPA firm in Omaha. We did tax work for successful individuals and small businesses. One observation from then (the late 1960s) still holds true today: most decisions made by business managers/owners take into account tax implications, whether it’s taxes on income, sales, property, or excise.


It would seem that after centuries of experience with taxes, a system perceived as being “fair to all” would have emerged. It has not happened. Tax policies are as perplexing now as they have ever been.


Demands for more services and more elaborate delivery systems for those services grow over time. These issues are budgeted and become authorized expenditures by our elected representatives. The corresponding need is to determine how this approved “budget” gets funded.


It is speculated that property taxes are the least liked of possible taxing options. Yet in Nebraska, local schools, counties, community colleges, and other entities are dependent on property taxes. How real estate is appraised determines taxing levels. Those with farm land and commercial property are at odds with residential property owners in terms of a “fair share” of the tax burden.



Then there’s income tax.  Some people suggest doing away with income tax (or minimizing it.) That begets the next question, do we eliminate programs or raise other taxes to compensate? All of a sudden, various individuals and entities worry someone is receiving a “break” that isn’t fair.


We know sales taxes are regressive. Yet, they are often construed as an option for providing “relief” from property taxes.


Source: http://www.ezperdiem.com/article/get_article_information/two-per-diem-calculator-misunderstandings-for-flight-crews

As Nebraska deals with a rainy day fund in excess of $700 million, legitimate, but perplexing, questions arise.

 

A strong state economy has helped Nebraska become a national leader in fiscal soundness. Can we now cut taxes at the State level? Should we now fund delayed projects and needs?


Are the rainy days of the future still a compelling reason to maintain the current level of surplus? Should the State do more to help schools that rely on local property taxes? Unfortunately, surplus funds from taxes can cause their own perplexing dilemmas.


Our nation was initially financed by import duties,t that didn’t work well. But, if we insist on corporations paying “high” taxes today to fund government, those costs are passed on to consumers and, as a result, the corporation finds itself less competitive in the world. The final blow? The jobs we want businesses to create don’t happen!  


So, where are the answers to the questions about tax implications? I can’t answer them. Perplexing says it best.



About the Author

Roger Doerr
Professor Emeritus, Hastings College, Hastings, Neb.

Roger Doerr is a retired professor emeritus of business and economics at Hastings College where he taught for 44 years. 
He was two-time President of the Nebraska Economics and Business Association.







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