It's a given that CPAs are leading advisors to businesses and individuals on a host of financial issues. Consequently, their clients and employers will rely on them to help negotiate the labyrinth of proposals that have been advanced to reform Social Security.
To assist CPAs in learning more about the ramifications of the different reform scenarios, the American Institute of Certified Public Accountants has prepared a comprehensive study, "Understanding Social Security Reform: the Issues and Alternatives." While the AICPA report doesn't take a position on any proposal, it does provide a platform for reasoned, informed discussion by providing impartial facts and analysis. The study identifies and examines four methods for improving the financial condition of the Social Security Trust Fund: reducing benefits; increasing revenues through a jump in payroll taxes; improving the rate of return on trust fund assets; and transferring other revenue sources into the Trust Fund, such as an appropriation of Treasury general funds.
How can CPAs themselves contribute to the debate? By serving as objective educators, helping their clients and employers find cogent answers to the weighty question, "How will Social Security reform affect me?"
CPAs can help individuals understand how benefit reductions would affect financial planning and retirement decisions, as well as how to build assets in private accounts to offset a reduction in benefits.
Likewise, CPAs can help businesses appreciate the impact that a payroll tax increase would have on total expenses and workforce decisions.
The profession, of course, should also serve as an authority on the tax law changes or tax increases that might come about to fund the trust fund deficit or replace moneys appropriated from the Treasury general fund.
According to the Social Security Administration's "best guess" assumptions, the trust fund surplus will peak in 2028 and decline steadily until 2042, when the fund will be exhausted. No matter what potential curative ultimately is adopted to safeguard our Social Security system, the CPA's voice should always be one of the most prominent in the discussion.
The full text of "Understanding Social Security Reform: the Issues and Alternatives" may be found at http://www.aicpa.org/members/socsec.htm.
Tom Ochsenschlager is the vice president of taxation for the American Institute of CPAs.
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