Given a recent epiphany while writing the latest Strothman & Co. newsletter The Real Biden Tax Plan a repeated, evaluative question presented itself over-and-over again and luckily a clearer answer came to my mind, finally! The question? Where is the direction of the CPA profession heading? Ever since I came to work for Strothman & Co. in December of 2019 I’ve heard that question, hinting the CPA profession is moving in a new direction away from compliance and into a more focused, consulting realm. I have come to agree with that assessment, in part, due to compliance becoming more and more automated; however, how automated can questions about PPP and EIDL loans and their related , potential forgiveness be? They didn’t seem too automated to me this past year? Did they to you? The only thing automated about them was the consistent e-mails and phone calls we received from clients throughout the 2020 tax year with likely more to come within the 2020 tax filing season.
More so, in my humble opinion, the CPA profession is heading into a larger consultative role with clients but more than that, as we move into a more wealth-based system of taxation, for which has been outlined and detailed here significantly, the CPA profession is headed towards a role of valuation more so than consulting over the upcoming tax years. Especially since the US government is clearly moving to a more progressive tax system ultimately designed to “tax the rich” but will inevitably soak both the “rich” and the middle-class with both increases to current and new taxes as well as indirect taxes across the board. Have you seen how much gas prices have gone up in just two months? Do you think that’s a coincidence? It’s not. Because of this, CPAs and their clients should be keenly aware that a progressive tax system will not only seek to tax your income year-to-year but will inevitably attempt to tax your wealth and or your increase in wealth year-to-year. This is mainly due to the substantial and ongoing strain on the US Treasury which will need close to $30-35 Trillion to pay off the US debt by year-end and continues to borrow more and more foreign monies just to pay the interest payment on the debt.
With this increasingly socialistic taxing strategy filtering its way through both prior and current US government administrations, CPA’s should move to gain more knowledge, understanding and training on how to value their client’s business and personal assets as well as how to compute the client’s increases in wealth year-to-year. I wish this wasn’t the direction of taxing the US government is heading due to my strong, personally held belief that US taxpayers should be taxed less and less so that they can be more free to live and work, provide for their families, and give more back monetarily to their communities, local charities, and churches as they see fit. Ultimately, the more Americans are taxed the less free we all are to make choices that better our lives and our families. Moreover, the less money we have personally due to higher and higher taxing requirements the less powerful we become. Money is power. The more money we have the more power we have to better our lives and better our families
Therefore, I would implore all CPA’s, EA’s, tax preparers and other tax professionals who truly care for and want to protect their clients – to begin to explore ways in which they or their firm can better assist their clients and future clients in the focused scope of business and personal asset valuations. As well as, begin to implement policies and procedures within the tax return preparation process to receive more relevant tax documents related to the value of the client’s home, major personal assets and similarly for their business ask if the client has had their business value assessed recently. Down the road this information will be very valuable.
The more quickly CPA professionals can prepare clients for this likelihood and inevitable shift of taxation on top of what is already a tremendously, cumbersome (tax) burden at year-end for most clients, the more both parties will be able to more smoothly transition clients to a better understanding as to why so much more will be required for tax purposes as it relates to the value of their personal and business assets, their stocks and bonds and capital gains, their investment portfolios, and their 401k’s and IRA’s. Additionally, these early and preliminary steps will enable tax professionals and their respective clients to better understand how their “increase in wealth” is expected to be taxed concurrently year-to-year. If we all begin to layout this process step-by-step with our clients we will all have better prepared, knowledgeable, and understanding clients so that the client – no matter the circumstance – will be able to make more informed tax, financial and investment decisions, as well as better financially game plan their future with their own tax professional and or financial planner for the upcoming, higher tax years ahead when this progressive tax structure is more fully implemented on all US taxpayers.
I’ve always heard – plan for the worse and hope for best. I pray we can plan for the best!