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GOP Tax Plans Manage to Simplify Some Complexities of Tax Code

GOP Tax Plans Manage to Simplify Some Complexities of Tax Code
(AP)

By    |   Monday, 13 November 2017 10:02 AM

Most of the attention surrounding the Republican tax plan is on who will benefit and be harmed financially by the legislation, although the attempt to simplify the system is also one of the GOP's selling points, The Wall Street Journal reported on Monday.

The plan "gets rid of several things which add a lot of complexity for a lot of ordinary taxpayers," said Duke University Prof. Lawrence Zelenak, so "on simplification, it's actually pretty good."

"The guy who's getting a salary and a W-2, his life's going to be a whole lot easier when he goes to fill out his tax return," said Rep. Tom Rice, R-S.C., a member of the House Ways and Means Committee, which approved the bill last week.

However, there is far from universal agreement on how much simpler the system will become. The Republicans claim that 90 percent of Americans will be able to file their taxes on a form so simple it could fit on a postcard is a vast exaggeration, according to Politico.

In addition, the most hyped simplification of the plan, reducing the number of brackets from seven to four, does not really simplify anything, since that aspect of taxes is easy to navigate with charts and does not take long to calculate

The full House and a Senate committee are each expected to vote this week on their respective plans.

Both versions would repeal the alternative minimum tax, a parallel system affecting more than four million households, while the House plan would consolidate a number of complicated breaks for higher education, according to The Wall Street Journal.

The House bill would also simplify tax forms by eliminating narrow deductions for tax-preparation fees, teachers' out-of-pocket expenses and moving costs.

Although simplification of the system has been part of the Republicans' promise to voters, for many a simpler code without the breaks could leave them paying more.

The most significant simplification is repealing the personal exemption and replacing it with a nearly doubled standard deduction while limiting or repealing deductions, most crucially the one for local income and sales taxes. The House version would keep a partial property-tax deduction.

Many home builders, real-estate agents and charities oppose the GOP plans, because these changes would limit tax breaks for mortgage interest and charitable contributions.

Other examples of those losing out if the legislation passes would be a married couple with $30,000 in deductible medical expenses for nursing-home care and households taking the student loan interest deduction, which would disappear in the House plan.

"Many of the people that I represent would rather have their loan interest deduction, if they have substantial student debt, than being able to file on a postcard," said Rep. Lloyd Doggett, D-Texas. In a jab at the prospect of simplification.

According to the Joint Committee on Taxation, by 2027, some 20 percent of households will pay more taxes under the House plan, with already in 2019 approximately eight percent of households paying more.

National Taxpayers Union Foundation executive vice president Andrew Moylan said that even while only discussing the aspect of simplification, the legislation is not going to solve complexity overnight… but we're definitely moving in the right direction."

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Most of the attention surrounding the Republican tax plan is on who will benefit and be harmed financially by the legislation, although the attempt to simplify the system is also one of the GOP's selling points, The Wall Street Journal reported on Monday.
gop, tax, overhaul, simplifies, tax code
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2017-02-13
Monday, 13 November 2017 10:02 AM
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