Tax Professionals' Perception of Small-Business Tax Law Complexity

Posted: 2 Apr 2005

See all articles by Laura R. Ingraham

Laura R. Ingraham

San Jose State University - Donald and Sally Lucas Graduate School of Business

Stewart Karlinsky

San Jose State University - Donald and Sally Lucas Graduate School of Business

Abstract

The author's report in this article on their study in questionnaire format that tested the perception of 89 small-business tax practitioners regarding the complexity of 37 tax provisions. They found overwhelming consistency on the five most complex and five least complex small-business tax provisions with partnerships, estate and gift valuations, tax-deferred exchanges, frequency of law changes, and retirement plans topping the hit parade. Progressive tax rates, estimated taxes, Social Security/self-employment taxes, corporate capital gain provisions, and cash versus accrual method were uniformly and consistently perceived as the least complex. These results have tax policy implications. According to the authors, for example, a House bill to move S corporations to a partnership regime may not be optimal from the simplification perspective. The authors question whether familiarity with an issue results in lower perception of complexity. There is some discussion in the tax policy literature about tiering (different tax rules for small versus large companies). That policy seems to have made certain tax areas (cash versus accrual, depreciation, installment sales, and possibly corporate alternative minimum tax and uniform capitalization (UNICAP) less complex for small-business practitioners.

Suggested Citation

Ingraham, Laura R. and Karlinsky, Stewart, Tax Professionals' Perception of Small-Business Tax Law Complexity. Available at SSRN: https://ssrn.com/abstract=697101

Laura R. Ingraham (Contact Author)

San Jose State University - Donald and Sally Lucas Graduate School of Business ( email )

One Washington Square
San Jose, CA 95192-0066
United States

Stewart Karlinsky

San Jose State University - Donald and Sally Lucas Graduate School of Business ( email )

One Washington Square
San Jose, CA 95192-0066
United States

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