A Lesson on Price

A few years back I was in a waiting room & picked up a
copy of Money Magazine. It was around March or April
& they had a feature story about income tax returns.

The magazine had laid out a dummy semi-complicated
tax return with a fictitious name & sent it to 50 different
tax accountants across the country. The recipients
ranged in size from national accounting firms down to
the CPA who works at home. Each was asked to
prepare the tax return & send them the bill for their
services.

The results were astounding (at least to me). They
received 50 different answers as to how much tax the
fictitious person owed in taxes. No, not one answer
was identical to the other. Some answers were close &
others were hundreds of dollars apart.

Now just what are we to make of this? Did they pick 50
tax people who were dummies? Probably not. I suspect
that the tax laws have become so complicated that no
one can make heads or tails out of them, even experts.

What it means is that the accountants are filling
out the forms to the best of their ability & knowledge.
There is probably no one correct answer to the right
amount of the tax to be paid.

There’s more.

There were 50 different  invoice amounts
charged for the same service on the same tax return.
Charges ranged from over a thousand dollars down to
fifty dollars.

Now what do we make of this? It seems like the fee is
whatever the traffic will bear.

I suspect that if you were to ask 50 different
contractors how much your room addition will cost, you
would receive 50 different answers.

So when people write me & ask “How much will it
cost?” my answer is always the same:

“I don’t know” If you want to know how to find out then go here