| CPAs’
Role in Reforming the Tax Code and Social Security
FEBRUARY
2005 - In last month’s Inaugural and State of the
Union Addresses, President George W. Bush talked about domestic
priorities for his second term, including reforms in both
the tax system and Social Security. Focus on these areas
of public policy is long overdue. Both our tax system and
the Social Security program are widely viewed as being poorly
thought out and overly subject to politics.
CPAs
as Leaders
No
group is more knowledgeable than CPAs about the pros and
cons of the various proposals that will be forthcoming,
because that kind of analysis is at the core of what CPAs
do. CPAs should thoroughly analyze every proposal and give
legislators, the public, and the media an objective perspective
about the short-term and long-term implications of public
policy proposals.
The
NYSSCPA is endeavoring to take leadership in the area of
taxation with a new committee appointed by NYSSCPA President
John Kearney: the Committee for Practical Reform of the
Tax System (CPRTS), chaired by David A. Lifson. This committee’s
charge includes developing a whitepaper on the current tax
system and the potential impact of alternatives. It is also
holding brainstorming sessions with CPA and non-CPA experts,
including economists and legislators and their staffs. The
first two CPRTS meetings got off to an excellent start with
a “moderated debate”: a far-reaching discussion
about the current tax system, whether it’s irretrievably
“broken,” and broad ideas about where to go
from here, and how.
Defining
the problem is itself a massive undertaking, and as touchstones
the committee used the AICPA’s guiding principles
of taxation and the four principles of taxation from Adam
Smith’s The Wealth of Nations: equity, transparency,
convenience, and efficiency.
The
committee will discuss issues such as the complexity, simplicity,
and fairness of alternative taxation systems like a national
value-added tax (VAT). The committee will use its whitepaper
to develop criteria for evaluating and commenting on various
proposals. The NYSSCPA will disseminate analysis and commentary
to its members, the media, the public, and the Congressional
leadership.
Regarding
the Social Security system, the NYSSCPA has joined a group
of large state societies, led by Texas and including Ohio,
Massachusetts, Pennsylvania, and New Jersey (as well as
the AICPA), to review and comment on various proposals.
As part of this initiative, the AICPA will update its excellent
study from the 1990s that gave a comprehensive overview
of Social Security’s history and of various options
for reform.
Focus
and Discipline Required
The
approach that the NYSSCPA is taking in both of these areas
affecting our national economy is the most active engagement
I’ve seen in years. Maintaining momentum, however,
will require focus and discipline. Like the weather, everyone
complains about tax policy and Social Security but nobody
does anything about them. But we recognize that we’re
already on borrowed time, and we need to move past complaining
into constructive action.
Throughout
the coming months, give us your views on the CPRTS and its
work, and give all of the NYSSCPA’s committees the
benefit of your expertise. CPAs are professionally prepared
to play a vital role in the transformation of our tax system
and Social Security program.
Louis
Grumet
Publisher, The CPA Journal
Executive Director, NYSSCPA
lgrumet@nysscpa.org
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