Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Posted by taxguru on January 3, 2003

Disservice Tax

As I constantly have to remind people, the issue usually isn’t what the tax rate is; but what is subject to tax. That’s why a flat income tax rate wouldn’t really simplify things much. There would still be a lot of machinations in arriving at the taxable income figure.

In this same vein is the issue of sales taxes. Historically, most states only assess sales taxes on the sales and leases of tangible items and don’t include payments for most services, such as legal and accounting fees. However, when a state becomes desperate for money, as is the case in the PRC, historical tradition can easily be tossed overboard. Since most politicians are very short sighted, they will be oblivious to the long term consequences of this quick fix.


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