Monday, 29 March 2010

progressive accountant

in a recent email conversation, i had occasion to specify one of the difficulties i have with my day job. as you will no doubt be aware, i'm a chartered accountant, and i mostly deal with tax.

if i do my job well, my clients will pay minimal tax. rest assured that everything i do is well within the law, but most of the rules i apply are only useful for those who are self-employed (or have a mixture of PAYE & self-employed income) and earn a reasonable income.

the problem is that when i do my job well, these people pay less. which means that someone else has to pay more. or, it means that there is less to spend on public services. when i do my job well, it actually goes against my personal priniciple of everyone paying their fair share. i'm pretty sure it's not good for the country either.

so how do i live with this inherent conflict between my job and my beliefs? well mostly, i just don't think about it. but i wonder if it's possible to be a good progressive and a good accountant?

in case you haven't caught up with my posts at the hand mirror, i wrote last week about how proposing in public isn't a good idea, why i won't be watching the movie eclipse, and what i felt about someone telling me they were a 6th generation nz'er.


Deborah said...

Hmmm.... I'm inclined to think that it's acceptable, even desirable, to use any legal means to minimise your tax liability. Legislators need to have the courage to get the law right in the first place, rather than relying on individual citizens to voluntarily pay more tax. In addition to that, as citizens, one of the few ways we have of constraining the power of government is to give them less money. So we should pay all the tax that is legally due, but no more than that, in order to reduce the power of government.

I'm using 'tax' loosely; I really mean it to comprehend tax paid less benefits and transfers received i.e. your net tax burden.

Having said all that, I smile when I pay my taxes. It's the price of living in a decent society.

Deborah said...

I've got more to say about this....

I think it is possible to be a good progressive and a good accountant. You are serving your clients to the best of your ability, giving them the best advice you can. It's up to government to set the rules, and you need to operate within those rules.

But of course, that doesn't stop you from lobbying to change the rules! For example, I wonder if it would be possible to introduce some sort of asset testing to Working for Families? Or maybe the tax rate on trusts needs to be slightly higher than the highest individual tax rate - a premium for using the trust structure to protect assets. Maybe the trust tax rate needs to be set at say 39%, with some kind of imputation structure when payments are made to beneficiaries. That would mean there is a time-value-of-money cost to using a trust structure, but no other cost.

I can see we need to get together sometime and talk tax!

stargazer said...

thanx deborah. you're right in that i apply the rules though sometimes i don't like them!

re trust tax rates, stuart nash agrees with you, as do i. trust tax rates should definitely match individual tax rates. there also need to be some "look-through" provisions for trusts, especially when it comes to working for families. currently, company profits are treated as an individual's income for WFF, and the same should apply to trusts.

also, when i say people should pay their fair share, i also mean they should claim what they're entitle to, and shouldn't pay more than they have to. it just annoys me that people with different types of income can arrange their affairs in ways that aren't open to everyone.