I would not presume to suggest the best specific path for reforming the tax system. However, past experience suggests that as the panels work gets under way, one of the first decisions that you will confront is the choice of tax base; possibilities include a comprehensive income tax, a consumption tax, or some combination of the two, as is done in many other countries. As you know, many economists believe that a consumption tax would be best from the perspective of promoting economic growthparticularly if one were designing a tax system from scratchbecause a consumption tax is likely to encourage saving and capital formation. However, getting from the current tax system to a consumption tax raises a challenging set of transition issues.

In 1986, tax reformers considered a consumption tax base and, despite the arguments in favor of such a system, they decided to enhance the comprehensiveness of the income tax system then in place. Circumstances are different today, and the right choice will require assessing anew the tradeoffs between complexity, fairness, and economic growth.

by Alan Greenspan, Federal Reserve chairman,
in a March 3 speech to a bipartisan panel convened by President Bush.

Your ancestors probably did the books for these professions that no longer exist. Can you identify them?

1. Wainwright
2. Chandler
3. Drover
4. Thatcher
5. Scrivener

Robert Lester Porter, CPA

Note: Multiple responses were permitted. Source: Spring 2005 Salary Survey (responses from 254 service-sector, manufacturing and government/nonprofit employers). Reprinted with permission of the National Association of Colleges and Employers, www.naceweb.org .

Sales of second homes are surging, as baby boomers seek investment and vacation properties in record numbers. A study by the National Association of Realtors (NAR) ( www.realtor.org ) said 23% of all properties purchased in 2004 were for investment while another 13% were vacation homes. NAR reported a record 2.82 million second-home sales in 2004, up 16.3% from 2003.

The typical vacation home buyer was 55 years old and earned $71,000 in 2003. Investment property buyers had a median age of 47 and earned $85,700. The median price of a vacation home was $190,000 compared with $148,000 for investment properties.

The most frequent motivation for buying a second home was to diversify investments. Others sought rental income or a family retreat. But nearly one of five second homes will become a primary residence after its owners retire.

Nobody ever said following the rules was cheap. In 2005 organizations will spend nearly $15.5 billion on compliance-related activities, according to a study by AMR Research ( www.amrresearch.com ). The amount could grow to $80 billion over the next five years.

Not surprisingly, the largest line item (for complying with rules ranging from the Sarbanes-Oxley Act of 2002 and Food and Drug Administration regulations to the Health Insurance Portability and Accountability Act of 1996 and document and record retention requirements) was internal staff costs. Technology spending was second; it represented some 42% of HIPAA compliance expenditures. The most expensive initiative? Sarbanes-Oxley, which eats up 39% of all compliance spending.

The high costs have caught some companies by surprise. In 2004 almost two-thirds had to pull money from other areas to help fund compliance projects.

Get Controls Under Control
Every business needs some controls and supervision to enhance performance and monitor effectiveness. But too many controlsfor example, requiring multiple signatures before any action can be takencan be counterproductive. Costs go up, performance drops, and employees get the message that management distrusts them and might ignore or even subvert the rules.

This top-management problem usually comes from controls initiated by middle managers trying to protect themselves against criticism from their bosses.

Only three business areas generally need controls to ensure performance and effectiveness: customer satisfaction, corporate integrity (safeguarding against any outside illegal activity) and internal fraud prevention.

So limit controls to business-critical areas and give employees the responsibility and incentive to succeed.

Its All in the Details
When preparing job descriptions, its OK to list the specific tasks employees are expected to perform, but its better to include the outcomes for which they will be held accountable. In todays business environment, responsibilities and priorities change quickly. Job descriptions should keep up with those changes and be clear about whats expected.

Stanley Zarowin

If your car disappears from the streets of Bridgeport, Conn., one night, it may well be the tax authorities that have it in tow.

Bridgeport this spring will join Arlington and Alexandria, Va., and New Haven, Conn., in rolling out the BootFinder, a high-tech law-enforcement tool that lets officers read the license plates of cars as they drive through its streets and checks the numbers against a database of tax scofflaws.

Composed of a camera and a laptop-like processor that plugs into the vehicles cigarette lighter, the system searches the streets as you drive by, says Andy Bucholz, president of G2 Tactics of Arlington. Cities can tow the cars or affix a warning sticker to the windshield giving you one more chance to get those tax checks in the mail. In New Haven alone, 1,800 car owners have done just that, coughing up more than $1 million to get their wheels back.

Cheryl Rosen

Fewer workers these days are content with most aspects of their employment.

Percentage who said they were satisfied with their jobs

Source: A survey of 5,000 households, The Conference Board, www.conference-board.org , 2005.

Developing the next generation of leadership is how businesses can stay ahead of the curve, according to a finding by a recent survey. The Top Companies for Leaders Study sought to determine how actively CEOs get involved in bringing along the next generation of leaders. It found 85% of the best 20 companies were holding their leaders accountable for developing their direct reports, compared with less than half (46% ) of other companies. Respondents said education, assignment-based development and mentoring were all good, but would work only if senior leadership was accountable. In fact, more than half of the top 20 companies earmarked between 6% and 15% of incentive pay toward leadership development, and about a third allocated 16% or more.

The study, sponsored by human resources outsourcer and consultant Hewitt Associates and the Human Resource Planning Society, was based on 373 U.S. organizations with average revenue of approximately $8.3 billion and average employee size of nearly 30,000. Organizations that offer quality leadership development programs increase their chances for long-term success, says Walt Cleaver of the Human Resource Planning Society.