Danny argues that tax accountants suffer from one-mindedness in their attempts at tax planning (i.e., reducing taxes at all costs). Is Danny's view of tax planning correct-i.e., does he understand what the goal of tax planning is? Please elaborate.
What will be an ideal response?
Danny has an incomplete view of the goals of tax planning. In general terms, the goal of tax planning is to maximize the taxpayer's after-tax wealth while simultaneously achieving the taxpayer's nontax goals. Maximizing after-tax wealth is not necessarily the same as tax minimization. Specifically, maximizing after-tax wealth requires one to consider both the tax and nontax costs and benefits of alternative transactions, whereas tax minimization focuses solely on a single cost (i.e., taxes). Indeed, if the goal of tax planning were simply to minimize taxes, the simplest way to achieve this goal would be to earn no income at all.
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