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Tuesday, December 14, 2010

Too Much Uncertainty in The Tax Law

In my last post, I listed 12 trends I discern from recent tax rulings and legislative activity with the number one trend being uncertainty. While we might think of uncertainty mostly existing at the federal level, it is at the state level as well. *

The Wall Street Journal has an article today also noting the problems of uncertainty in the tax law. In "'Temporary' Tax Code Puts Nation in a Lasting Bind" (12/14/10), the authors write:

"The level of uncertainty, unusual for developed nations, complicates planning and discourages hiring and investment, many economists and corporate executives say."

This is all really an odd way to design a tax system. It also makes people forget why we have a tax system (to raise revenue for government operations).

What do you think?

*An example of uncertainty in California where it is not yet known how Prop 26 affects 2010 legislation including the conformity bill passed in April 2010 (which likely causes at least one taxpayer to pay more tax).


sanford millar said...

I remember the 1986 Tax Reform Act was to be the last major change in the IRC, until the next one. What you have properly discerned is an increase in the velocity of change. The increase may be due in part to the needs of business to adapt to and taxation just follows.
THis is but another example of Moore's law.

tax liens investing said...

There will definitely be conformity issues to arise if the tax system is just there to repair a few regulations and not seeing the bigger picture of its implications.