Estate tax as income tax

I just finished reading an article recommended by Richard about the estate tax, titled “Death and taxes“. It appears in New Statesman, a UK magazine “created in 1913 with the aim of permeating the educated and influential classes with socialist ideas.”

I’m glad I read the article in full before reading the magazine’s history, as it would’ve no doubt coloured my impression. The article refers to a John Rawls’ idea that would revolutionize estate taxes:

… hence inheritance tax could be made progressive, through orienting it towards receivers rather than donors. Large estates need not attract any taxation, as long as they were dispersed among a number of relatively disadvantaged recipients. At the same time, even small estates could be taxed heavily if they were all left to others who were themselves already wealthy.

I love this idea. Will it be implemented though? Most political discussion of the tax revolves around scrapping it or keeping it. It will take leadership to steer the discussion towards reorientation the likes of which Rawls suggests.

The article defends the estate tax on a number of points, but the free market one resonated with me most, which is no big surprise:

A free market in trade and employment gives us, let us suppose, a dynamic, innovative and thriving economy. It does this by incentivizing hard work, and letting economic rewards flow to those with the best ideas and the greatest capacity for hard graft.

But, if this is our vision of society, we surely must admit that the unearned windfall gains of inheritance tax distort this picture. Large inheritances distort the level playing field which would allow the dynamic and innovative to prosper.

Turning the estate tax into a income tax on the recipients would certainly shake things up, potentially improving the competitiveness of the economy while preserving the source of progressive government revenue. We should give it a shot, but the political will has to be there.

Who audits Google?

Sometimes I wonder to myself who audits this company or that one. I thought I was the only one, but apparently I’m not.

I track search terms used to arrive at this site using 103bees.com. It’s a good complement to Google Analytics. One of the latest questions someone asked, and came to my site seeking the answer, was “which accounting firm audits google?”

Well, intrepid reader, wherever you are, the answer is Ernst & Young.

Google went public in 2004, and their annual reports since then are available on their Investor Relations website.

In auditing, the audit report date is the date on which fieldwork is substantially complete. I think it’s interesting to note from Google’s 2004 Annual Report, the audit report is dated January 28, 2005 for a December 31, 2004 year end. That’s a really tight deadline, and I would imagine some late nights were involved.

I’m heading into a job on Monday that is very tight deadline-wise as well, and there will be some late nights there and lots of accompanying Thai takeout eaten. The job lasts for three weeks and is essentially an early taste of busy season. Blogging may be affected.

Anyway, the 2005 audit report is dated March 10, 2006, a much more manageable schedule. The 2006 report is dated February 27, 2007. Interesting that it has shifted around so much over these three years.

Professional 2.0: beacon or buzzword?

Rick Telberg is conducting a survey of CPAs about their thoughts on the future of the profession and what they see as some challenges and issues facing professionals. He shares a few early responses in a recent post:

“An increasing number of young people do not want to seriously work toward the accounting professional status of CPA.” I wonder if there was any evidence provided to back that up, because Rick isn’t sharing (yet). It did make me question why I’ve been reading so many articles about how exciting and even sexy being an accountant had become post Sarbanes-Oxley. Am I not sexy anymore?

Others cited the shortage of new talent coming on the scene, or the barrage of regulations and complexity as their top concerns as they look to the next decade and beyond. The talent thing will sort itself out in the long run, and the worst of it is probably past us. Regulations and complexity will reward those that go the extra mile to stay educated.

“CPA 2.0” and “Profession 2.0” are used to describe the ultimate direction of the profession by a final respondent, as he suggests that it will shift into more of an industry. “Systemization will be the buzz word for the next five years. CPAs will really begin to run their firms like a business.” I don’t agree.

There will be successful entrepreneurs that can take some aspects of the services provided by accounting firms today and “systemize” them, gaining efficiencies and making a tidy profit. But the profession will endure. In many respects it will thrive because of the opposite of systemization: By differentiating based on service, by pricing based on value, and by upholding the ethics and integrity required of a professional.

If you’re interested, take part in the survey.

EditGrid User Survey response

EditGrid, the online spreadsheet app that mimics Excel in format and functionality, sent me a survey a week ago through email. The survey sought my thoughts on the following questions:

  1. Use Cases: What are you using EditGrid for?
  2. Features: What new features do you desire the most?
  3. Usability: How can we present our features better to you and help you work more efficiently? We welcome your suggestions, from small refinements to major improvements.

I wanted to keep my answers concise, since I figured they were going to get a lot of responses. I wrote back:

  1. I’m testing out EditGrid with personal spreadsheets and blogging about it (neilmcintyre.ca)
  2. Just make it more responsive and more like Excel
  3. Present the features as in Excel – I guess this entails copying their new format (Office 2007)

Responsiveness would be at the top of the list, as I found it to be lagging a bit compared to Google Spreadsheets. Some specific features I use in Excel (reflexively) are still missing and I do miss them when I notice, but it’s the lag that kills the experience.

Reading over my response now, a few days later, I’m wondering whether point #3 is really all that helpful. Office 2007 doesn’t have that ubiquity just yet that 2003 enjoys, and the difference in interface is shocking. Copying the ribbon at this point may not be the best plan.

That being said, they’re on the right track.

Sending out a survey to existing customers is a great way to solicit feedback. Smart, proactive accounting firms are probably already doing this with their client base, and using the comments and suggestions to adjust their service offerings accordingly.

Google’s 20% time at accounting firms?

It’s well known that Google encourages their employees to spend roughly equal to one day per week pursuing personal projects, or about 20% of their time at work. The results of this unique policy are numerous and successful: Gmail, Google Suggest, Google News, AdSense and Orkut.

Google logoWhat would happen if an accounting firm allowed their knowledge workers to devote time to personal projects? Would great new ideas surface for snagging new clients, serving existing clients in better ways, or improving processes within the office? I think they would, but it would definitely require some discipline to set aside that much work time away from client work.

I think the benefits from this type of system could be achieved at an accounting firm without needing 20% of available working hours. All that is needed is a method for sharing the ideas with everyone in the organization and a loose structure for obtaining approval to put the idea or plan into action. A wiki on the intranet would be simple to set up and, since they are editable by anyone with access, enable everyone to participate right away.

Google describes “the engineer’s life at Google” with reference to the following pledges:

We listen to every idea, on the theory that any Googler can come up with the next great one.
We provide the resources to turn great ideas into reality.
We offer our engineers “20-percent time” so that they’re free to work on what they’re really passionate about.

I think it would be a bigger challenge to create the type of environment that Google has meticulously cultivated since its inception at an established accounting firm. It’s all too easy to keep doing things the way they’ve always been done, not unlike following last year’s audit plan, in firms. But I believe great things can be accomlished by a firm willing to break out of the mould and take the cue from Google.