Kay Bell reports that Fox News’ John Stossel is ticked off that he has to pay his tax accountant thousands of dollars every year:
This year’s anti-tax rant winner is Fox News’ John Stossel. But it’s not just taxing jurisdictions that make Stossel’s list. He also has no love for his accountant.
The complexities of the tax system, Stossel said last week during an appearance on colleague Bill O’Reilly’s show, forces him to pay “several thousand dollars” to Bob, his accountant.
If he didn’t pay for tax accounting help, Stossel figures that he could be spending that cash on 200 steak dinners, 100 massages, a motorcycle, a cruise.
Predictably, Stossel’s comments got under the skin of some tax preparers. Frankly, I think it’s much ado about nothing.
Stossel was merely trying to demonstrate the absurd complexity of our tax laws. Most tax preparers I know share this view.
What I found more significant – and the reason Stossel shouldn’t be complaining – is that if he spent thousands of dollars on his income tax return, he is probably doing very well indeed.
The national average tax preparation fee is $229. The likely reason Stossel paid well over ten times that amount to his tax preparer is that he has well over ten times the net worth of the average taxpayer.¹
Because he has a greater net worth it makes perfect sense that his tax return takes additional time to prepare. Stossel, by virtue of his greater wealth, probably has one or more of the following items which make his tax return more complex than that of the average middle-class taxpayer:
- Multiple and significant stock trades
- Sales of capital assets
- Multiple and significant investments in closely held corporations
- Multiple and significant investments in rental real estate
- Significant itemized deductions
- Schedule C for his lucrative book publishing business
And I’d wager that a good chunk of the fees he paid to his tax accountant were for bookkeeping work. Although this work is time consuming, it is certainly not complex.
In short, if Stossel were truly concerned about the money he was spending on tax preparation services, he could have purchased a simple accounting software package like Quicken or Quick Books and done the accounting work himself.
That way he would have had the money for those 100 massages… even if he no longer had the time.
Footnote:
¹ Stossel says he could have bought 200 steak dinners with the money he gave to his tax preparer. Assuming that the cost of a steak dinner is $30 (it’s probably much more, especially in New York, where Stossel lives), that means he paid his tax accountant $6,000. Either his tax preparer ripped him off or he has one massive tax return.
5 responses so far ↓
1 John A Andersen CPA // Apr 18, 2010 at 10:12 pm
I have been preparing taxes for over 40 years and believe the recent complexity is outrageous. Our Congress (Washington, Sacramento and probably a few other states) have the right and duty to tax but should not have the right to make in absurdly complex.
The only solution is to require every politician (and their staffers) to manually prepare their own returns from the initial starting point of gathering their own tax data to completion. No exceptions.
Think we might get some common sense in the system?
John A Andersen CPA
2 Peter // Apr 19, 2010 at 10:53 am
John,
Thanks for visiting.
I don’t think the complexity is “recent.”
By the way, even Doug Shulman has a tax professional prepare his return for him.
3 John A Andersen CPA // Apr 20, 2010 at 9:28 am
Peter
The complexity is not recent but accelerating. California compounds the problem by not conforming to most changes. And except for a few people like Tim Githner I doubt if any Washington insiders don’t use a professional. They couldn’t afford the time.
IAC, your interesting to follow on Twitter
John A Andersen
4 Peter // Apr 20, 2010 at 10:23 am
John,
I agree. The problem is getting worse, not better.
Everytime Congress “simplifies” the tax code, I get richer.
5 mitch529 // Mar 28, 2011 at 10:07 pm
Is it just me or is John Stossel just ranting lately with no substance? With the state of most people’s lives in the US right now, with a very small percentage of the population doing quite well during this economy, he has a lot of nerve complaining. His rant on Native Americans was a disgrace. He needs to do some real research before he starts shooting off at the mouth. Just lazy.
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