Categories
Accounting Standards

Protecting the public interest, Web 2.0 style

Richard Murphy’s on fire these days, taking it One World Trust, explaining the power of blogging and giving it to New York CPAs.

Too many in accountancy see their role to be increasing the wealth of the wealthiest in our society… and they’re politically cynical enough to pander to their clients and ignore the ethics of their duty to society as a whole.

That’s part of a scathing response to the New York CPAs recommending a flat tax, which always will favour those currently paying at the top rate of tax. When it comes to tax advocacy, the profession as a whole is entirely too focused on their bread and butter.

The One World Trust promotes education and research into the changes required within global organisations in order to achieve the eradication of poverty, injustice and war.

They recently published their Global Accountability Report 2007, which assesses thirty global organizations “according to the four dimensions of accountability as defined by the Global Accountability Framework: transparency, participation, evaluation, and complaint and response mechanisms.”

One of the organizations they reviewed was the IASB, the international accounting standard-setting body, and they laud the organizations efforts to engage with stakeholders when setting those standards. The problem is they didn’t test the process. And the process clearly broke down when it came to IFRS 8, which deals with segment reporting.

I find it maddening that One World Trust spouts off about eradicating poverty, injustice and war, but would then turn around and commend an organization that went out of its way to avoid creating a standard that is pretty much integral to doing just that. Back to one of Richard Murphy’s original posts about the report (he’s made many since):

In reality the IASB entered into a sham consultation on IFRS 8 and never once had intention of changing its proposal. Far from being congratulated on their procedure the IASB should be condemned for their profound cynicism and contempt for consultation.

Richard is a real leader in the profession and a role model for young people just entering it such as myself. And he understands just how much power he has, and how he can wield it to effect positive change:

The way to make sure that mistake is noticed is to get it onto Google so that when someone looks for the One World Trust and Accountability they’re likely to find these comments as well.

Here’s a little more Google juice for you, Richard.

Categories
Taxation

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.