THE REALITY OF TAXES

Consider this... a tax is a means of distributing the burden of the cost of government. Taxes are different from fines or user fees because the tax does not entitle you to anything in return. Taxes are compulsory to the payer, not voluntary. The value of the government benefit that is received by any tax-payer, does not necessarily square with the amount of tax that that individual has to pay. How is your tax figured? To say the least "it is complicated." Jay Leno observed that 'according to a poll, seven out of ten Americans think that tax code is too complicated. Well, of course it is complicate. That is why they call it a "code". The don't you to understand it!" Albert Einstein was quoted as saying, "The tax code is too complicated for a mathematician. You need a philosopher!" The most telling thought on taxes comes from Supreme Court Justice Potter Stewart, when he observed, "Virtually all persons or objects in this country may have a tax problem. Every day the economy generates thousands of sales, loans, gifts, purchases, leases, wills and the like, which suggest the possibility of a tax problem for somebody. Our economy is tax relevant in almost every detail." To deal with complexity and enormity of the situation, structuring each transaction to reduce tax cost and increase tax saving require serious tax planning. Legitimate means of reducing taxes are described as tax avoidance, while illegitimate means are called tax evasion. There are subtle differences between both and tax preparers are reminded that their effectiveness reside in their behavior from the perspective of their firm, their government and society.