Taxes to Be Filed on a Postcard?

The dream of tax reformers for decades has been to transform the maddeningly complex federal tax code into a system simple enough for Americans to file their tax returns on a postcard.

Republican leaders who introduced the Tax Cuts and Jobs Act on Thursday said this dream would become reality for 90 percent of taxpayers. Meeting with House Republican leaders at the White House, President Donald Trump even held up a sample of what the tax form might look like.

[lz_ndn video=33202138]

“We will make the tax code simpler and fair,” he said. “It’s called simplification.”

The claim that the tax form would be the size of postcard for nine out of 10 taxpayers caught some experts off guard.

“I was a little surprised by that,” acknowledged Stephen Moore, an economist who helped Trump develop his tax plan as a presidential candidate. “Trust but verify.”

Marc Goldwein, senior vice president and senior policy director for the Committee for a Responsible Federal Budget, quipped: “I think it’s going to be a pretty big postcard.”

But Goldwein said the bill would make the system simpler, primarily by doubling the standard deduction — to $12,000 for individuals and $24,000 for married couples. He said that would lead to fewer people itemizing, which is much more straightforward.

[lz_related_box id=”858430″]

Apart from the headaches of filing taxes under a complicated system, Goldwein said lost time and money complying with the code hurts the economy. Tax software has mitigated but not eliminated that concern, he said.

“There certainly are costs to complexity,” he said.

Part of the price for the simplicity, though, is that the bill would reduce some tax breaks. The popular home mortgage interest deduction would be less generous to wealthier taxpayers. Taxpayers also would not be able to write off as much for the property taxes they pay to state and local governments. And the tax break would be eliminated altogether for state and local income taxes.

(photo credit, homepage image: W2, CC BY-SA 2.0, by 401(K) 2012; photo credit, article image: Personal Income Taxes Ver7, CC BY 2.0, by www.ccPixs.com)