FOCUS
Jade Walle, CPA, is an assurance partner with PricewaterhouseCoopers A member for 23 years, Walle has previously taught the course, “Trends career with PwC in Tulsa in 1996, transferring to Markets Group in London in 1999 and has also
article entitled, “2020 Vision for Oklahoma Tax Reform,” where he described 12 current problems and 12 practical steps Oklahoma should consider as it relates to state taxation including sales, use, property and income taxes. You might have noticed that the word “steps” was used here, as opposed to the often-used term, “reform,” and the reason why will be explained shortly. Make no mistake, Mr. Watson’s article and the 12 steps described are feasible, logical, fair and sound. Te fact that we begin the discussion for tax “reform” assuming we must operate within the confines of the existing state income and sales tax system is fallacious and is reminiscent of the idea of a false dichotomy, also commonly referred to as the either/or fallacy. Simply said, when we’re offered a choice for either item A or item B, the construct we are operating within is that there are no other alternatives, such as C, D, E, etc. As it relates to state taxation, we must ask ourselves the obvious question, “Have we operated in the current taxation environment so long, that we do not even question whether it is right or wrong, or whether a different system might meet what CPAs generally agree are the most important aspects of how a taxation system should work?” Te AICPA responded in its Oct. 17, 2005
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release “Understanding Tax Reform: A guide to 21st Century Alternatives,” saying we should evaluate tax reform based on the following principles:
• Simplicity; • Fairness; • Economic growth and efficiency, • Neutrality; • Transparency; • Minimizing noncompliance; • Impact on government revenues;
16 CPAFOCUS July/August 2020
n the November/December 2019 edition of CPAFOCUS, fellow OSCPA member Brent Watson, CPA, penned an insightful
• Certainty, and • Payment convenience.
In Mr. Watson’s aforementioned article, he
cited Adam Smith’ book, “Te Wealth of Nations” (1776), where Smith argued that taxation should follow the four principles of:
• Fairness; • Certainty; • Convenience; and • Efficiency.
Mr. Watson’s article highlights 12 areas where
the Oklahoma sales, use, property and income tax systems could be improved, arguably all to address various aspects of an effective system of taxation described above. Te reality is that there are a multitude of other incremental improvements that should or could be made to the Oklahoma taxation system, but the mere fact that so many bug fixes are necessary points to the larger issue and ultimate question: Should Oklahoma continue to operate in its current income and sales and use tax system with any proposed fixes simply a well-meaning but futile endeavor within a tax system that is not sustainable? Te fact that Mr. Watson’s article had to be written in the first place, is evidence that the current system does not accomplish Adam Smith’s and the AICPA’s principles for a proper system of taxation. Te next question we would expect is, “What
would you replace the current income, sales and use tax system with?” Good question, and I am extremely glad you asked. Currently, several states, including Alabama,
Georgia, Minnesota, Idaho and Nebraska, are seriously considering doing away with their current income and sales and use tax systems, which means no more state income tax returns, in favor of a state FairTax. Te FairTax is actually a 21-year-old proposal
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