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If tax codes are simplified, how will that change the professions/jobs in the tax/accounting world?

I am considering a major in business/tax/accounting. Since I hear a lot of talk from Washington about tax reform, it made me think...

If the tax codes are simplified, will this effect the number of jobs and number of good jobs in the tax/accounting industry? I'm not sure this would be a good thing for the tax world.

#taxesforlife

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Lane’s Answer

While on the surface it may seem that a more simplified tax code would mean less tax professionals are needed. The reality is people need help navigating the changes to the code and understanding the impacts to their business. Our profession has seen a big boom in business due to the recent changes to the code and we expect even more work going forward as the new laws take effect.
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Edward’s Answer

It would depend on how much the tax codes are simplified and where. Both individuals and corporations are subject to numerous different level of taxation on the federal, state, and sometime local level.


If there was significant simplification, for example to federal individual taxation, it could reduce the need for tax assistance. Still, most people prefer to file electronically and would want to put together the tax forms themselves; so there would still be business for individual tax preparation companies like H&R Block and Turbo Tax. It could reduce the need for, or a least the number of hours, for professionals working on complex individual tax returns.


In the corporate world, tax accountants don't just work through the complex rules of the tax code, but need to gather together the information needed to prepared the tax return from the accounting records. Tax has their own accounting rules which make adjusting accounting records to a tax basis necessary. Even if the tax code was greatly simplified there would still be a need for tax accountants in large organizations (either hired by the company themselves or by hiring an accounting firm to provide the services).


Generally, it is unlikely that the tax code will ever be simplified to such a degree that the services of a professional will no longer be required. It could reduce the overall demand for these services but they will still exist.

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Anthony’s Answer

No.

As you will find in your studies there is a surprising amount of "art" in accounting. Even if the tax code is radically reduced/simplified, tax professionals will still be in need. Further, the skills taught to accounting and tax professionals are broadly applicable to all kinds of business applications.
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G. Mark’s Answer

I think it's safe to say that simplifying tax codes would result in a larger number of people doing their own taxes and fewer folks being hired by them to do this. But there's another aspect. Tax codes are put in place to manipulate the taxpayers into particular fiscal behaviors that politicians think will benefit society. There are those that also think these are to benefit certain parts of society or at least particular groups or industries. But they are intended to have an effect. Simple examples are tax credits for children, for home ownership, for certain business activities, for charitable contributions. It would be very hard to make a blanket statement about how "simplification" will effect these, because we don't yet know what counts as "simplification".

My own feeling is that any simplification will be strongly resisted because it will deprive someone, somewhere of a method of controlling, or at least influencing, society. And whether that influence is good or bad is obviously up to interpretation. Most would agree that encouraging charitable giving is a good thing. Some tax "loopholes" are good for the beneficiaries and bad for others. And some think that whatever their particular tax regulation they favor is simply in the cause of societal good.

The bottom line is that the first effect -- reducing the number of tax preparers -- is fairly obvious. And the second effect is subject to quite a lot of variables.

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Hongyun (Heley)’s Answer

While some aspect of tax codes are simplified, there are also a lot other items are happening, such as GILTI (Global Intangible Low Tax Income), BEAT (Base Erosion and Anti Abuse Tax) and other international taxes.

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Miho’s Answer

I do not worry about the tax jobs going away because of future enactment of simpler tax laws (e.g., flat tax). The legislative intent for the extremely complex current tax codes and regulations are results of congress's attempt at provide "fair" financial burden to all people and businesses based on their financial and social status and roles. Tax rules can also be used to encourage and discourage certain behaviors, promote social welfare, and to meet specific objectives. Some of those rules have become too complex and outright dysfunctional (for example, alternative minimum tax and passive foreign investment company rules). I can see that those bad rules may go away to ease the compliance burden.
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