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Tax is only a piece of the accounting world that has a world of importance, and not just in the United States. Tax accounting is about as evenly important as all other factions of accounting, such as audit or consulting. Tax accounting is the most associated with the government, as every citizen, corporation, and even people who don’t even live in the US must file some kind of tax return if there is money being dealt with in the United States. These are only a few types of returns that the IRS inspects: Federal 1040, 1065, 1041, etc. These are only one major part of the Tax accounting as there are also returns that must be filed with states and sometimes even cities. Taxes are what allows the government to spend on things such as education, our community forces including police and firefighters, and so many other things in our everyday lives.
In recent years, we have had the largest a major tax policy change since the Reagan era. Over the past couple of years since that major change, the growth of tax revenues has been decreased substantially. While the 2019 4.2% growth was stronger than the 0.4% growth in the fourth quarter of 2018, it was still significantly weaker than the first three quarters of 2018. This is due to the decrease of personal, corporate, sales, and property taxes. According to Lucy Dadayan in her article in the State Tax and Economic Review, the growth had varied among major revenue sources. Personal income taxes had decreased in the second quarter, which was a response to the spike it had in December of 2017 and January of 2018 due to changes in the Tax Cuts and Jobs Act. The 4.2% growth was also due to the uninterrupted growth in state sales tax since 2010. According to Dadayan, we can expect more increases in the state sales tax revenues going forward.
In a podcast from Bloomberg Tax, the IRS’s Chief Counsel, Michael Desmond, talks on what companies should expect from the IRS. The tax change has changed many things in the tax world and there are many things that are changing within the tax code that many companies as well as individuals must be vigilant when doing their returns. Taxes have been the backbone of America and is how the government pays for many of the services that we use in our daily lives. However, the IRS has had slow moving process of changing the tax code. Desmond said, “…we’re just trying to keep the trains run.” This is how the IRS has been moving forward with the tax code. The biggest thing about a changing tax code is with all tax accountants having to learn new things with each individual and corporate returns. This can be problematic due to having to keep all of these new codes up to par with the IRS’s standards.
In my opinion, changing the tax code can be very important for everyone that’s effected by it. Tax codes are constantly changing since there are different ways to get around these tax codes. The government receiving money can be important in order for everyone to receive those important services that we all use. Considering that the value of money constantly changes, as do the tax codes. On the other hand, I also think that abusing the population with too high of taxes can be problematic. This can drive the people away from government policies, further trying to get around these new tax codes and paying less taxes to the government. The IRS does give tax refunds for the taxes that they don’t use, but these can be much lower than people expect. Everyone waits for their tax refund after they file their returns but receiving a lower than expected refund can cause problems in their daily lives. For example, when people need to pay their bills, they can rely on their refund to be able to pay for those bills. But considering that the amount on the refund can be smaller than expected, those bills might become late or overdue, causing problems throughout the market, both for the customer as well as the service provider.
In all, taxes are substantially important in order to keep the country moving, but it can also cause the population heartache in the end due to higher taxes. This can cause a disruption in many different aspects including for individuals, as well as services such as banks and markets. While its possible, it’s hard to think about a world rid of taxes completely, and this is why tax change can be so important.
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