I see Babbling Brooks is inching away from his support for Joe Wood in the latter’s Battle Against RevCan. He states that he has been persuaded by the arguments contra-Joe posted by Sean and Ginna and Shannon.

Like each of these commentators, I am neither an accountant nor a financial planner. I do not speak from a position of any intellectual heft. But I remain convinced that Wood has been burned (snork) by RevCan’s policy.

All of the Unsupportives make short work of Steve Maich’s comments re: the poor unsophisticated engineer who done found hisself with all them fancy stocks an’ all. Fair enough. But after that, it seems to me that they’re all missing the point something fierce.

Sean’s most convincing argument is that the tax rules were clear at the time Wood got into this mess, and he should have followed them. Ginna makes fundamentally the same point, with an added straw man about Bre-X. Shannon makes the best argument of the three, and includes a careful analysis of the effects of changing the tax code along the lines of Maich’s suggested remedy for Wood. But but but…

A while ago I was ranting on about a flat tax plan to an accountant friend of mine. I blithely conceded that a flat tax would put accountants out of business… and he stopped me short. “Accountants would still be able to find work,” he said, “because the definition of ‘income’ is still challenging, even in a flat tax environment.”

This is where I am planting my flag, the ground I will defend. The definition of income. It is clear that Shannon has a great deal more expertise in this area than I do (so maybe I should just shut my gob, eh, Normie?), but for my money she still misses the point. Imagine we were writing the tax code ourselves, from scratch, and we were trying to develop an understanding of the definition of income and how it applies to stock options. A priori, I think we could easily come to one of at least two conclusions: (a) you should be taxed on the market value of the stock on the day you purchase it, and (b) you should be taxed on the market value of the stock on the day you sell it. For all I know there may be more options that that… ([c] you should be taxed on the market value of someone else’s stock on the day the NHL and NHLPA agree to terms?)

Forgive my tax ignorance, but it makes at least as much conceptual sense to me that one ought to be taxed on the day one sells as on the day one buys. If I go to school for 14 years after high school in order to become, oh I don’t know, let’s be hypothetical, a doctor, am I taxed on the day of graduation, based on the market value of my training? Or does RevCan wait until I get an actual dollar in my hand before coming after me with a pointed stick?

I think it’s fair to wait until someone who buys stock realizes cash value before being taxed. Pace Shannon, I don’t think this makes me a socialist–which I promise you, is the very first time in my life (since age 11, anyway) that I have ever been associated with anything approaching socialism! It’s kind of a dirty, icky feeling, actually. Makes me feel I have to go and scrub something.

Anyway, although I am disappointed to lose Damian from my team, I still support Joe Wood. It’s about defining income. And I don’t think that makes me a commie!
;-)