If Republicans are successful in passing tax reform as (or close to) envisioned, the large majority of Americans’ tax returns would look like this (except for “2. Add ½ of investment income,” which is not part of the current plan).
Can we get an amen?!
For years those of us pushing for a low and simplified tax structure have had in the back of our minds something similar to the first 1040 from 1913 (see here). Arguably, House Speaker Paul Ryan’s “Postcard” is even better.
Currently, some 70 percent of tax filers take the standard deduction rather than itemizing. With the simplification and increase in the standard deduction, it’s possible that number could grow, perhaps to 75 percent or 80 percent. And simpler means fewer ways to game—or defraud—the system.
But the naysayers are coming out in droves. The same ones who pooh-pooh the notion that the Republican tax reform could push the economy up to 4 percent GDP or higher say there is no way the 1040 postcard would ever work.
But most of the tax reform critics benefit from a more complicated tax system—from deductions and credits and loopholes. And those who want higher taxes know that a more complicated system makes it harder for individuals to know how much the government is ultimately taking from their hard-earned income.
Tax reform isn’t just about cutting rates, it’s about making the system more transparent and accountable. The public wants both, the big-government types want neither.