President Trump has a huge rally in Raleigh, South Carolina, he is standing at a podium facing the camera arms spread wide the crowd behind him is going wild they are seated in front of a giant glass wall, it looks awesome

Posted by Alex Hendrie

Millions of American families from every state and every walk of life benefit from President’s tax reform.

The plan doubles the standard deduction, expands the child tax credit, and repeals the AMT. Each of these changes will be beneficial to thousands – or millions of taxpayers in every state, according to recently released IRS data.

 The unified tax reform framework released by President Donald Trump and Republicans in Congress outlines four goals: 1) making the tax code simpler, 2) giving American families more take-home pay, 3) creating more jobs, and 4) allowing trillions of dollars stranded overseas to come back to the U.S. economy.

Millions of American families from every state benefit from the reforms in the GOP tax reform blueprint. The plan doubles the standard deduction, expands the child tax credit, and repeals the AMT. Each of these changes will be beneficial to thousands – or millions of taxpayers in every state, according to recently released IRS data. 

The unified tax reform framework released by President Donald Trump and Republicans in Congress outlines four goals: 1) making the tax code simpler, 2) giving American families more take-home pay, 3) creating more jobs, and 4) allowing trillions of dollars stranded overseas to come back to the U.S. economy.

The framework achieves the first goal – tax simplification for individuals and families – through several reforms to the code.

First, the plan folds the seven brackets into three, 12 percent, 25 percent and 35 percent.

Second, the framework doubles the standard deduction to $12,000 for an individual and $24,000 for a family. This tax reduction ensures that those currently in the 10 percent tax bracket see their taxes go down to zero.

Third, the plan expands the child tax credit while folding other deductions into this structure.

Finally, the framework repeals the Alternative Minimum Tax, simplifying tax compliance for millions of Americans.

Today, the tax code is absurdly complex. Since 1985 the tax code has doubled, and it has increased six fold since 1955. Today, the code totals 2.4 million words. This complexity costs Americans millions of hours and billions of dollars in lost productivity. According to the Tax Foundation, Americans will spend more than 8.9 million hours complying with the tax code, costing $409 billion. 2.6 billion hours will be spent complying with individual income taxes, costing $98 billion each year. Similarly, the National Taxpayers Union Foundation estimates that taxpayers spend 1.8 billion hours on 1040 forms a year, costing $262 billion every year.

As noted in this report, the policy changes proposed by the Republican framework – specifically the doubling of the standard deduction, repeal of the AMT, and the expansion of the child tax credit – benefit millions of Americans across every state, leading to tax cuts and simplification.

These reforms will enable the majority of American families to file their taxes on a postc

The framework achieves the first goal – tax simplification for individuals and families – through several reforms to the code.

First, the plan folds the seven brackets into three, 12 percent, 25 percent and 35 percent.

Second, the framework doubles the standard deduction to $12,000 for an individual and $24,000 for a family. This tax reduction ensures that those currently in the 10 percent tax bracket see their taxes go down to zero.

Third, the plan expands the child tax credit while folding other deductions into this structure.

Finally, the framework repeals the Alternative Minimum Tax, simplifying tax compliance for millions of Americans.

Today, the tax code is absurdly complex. Since 1985 the tax code has doubled, and it has increased six fold since 1955. Today, the code totals 2.4 million words. This complexity costs Americans millions of hours and billions of dollars in lost productivity. According to the Tax Foundation, Americans will spend more than 8.9 million hours complying with the tax code, costing $409 billion. 2.6 billion hours will be spent complying with individual income taxes, costing $98 billion each year. Similarly, the National Taxpayers Union Foundation estimates that taxpayers spend 1.8 billion hours on 1040 forms a year, costing $262 billion every year.

As noted in this report, the policy changes proposed by the Republican framework – specifically the doubling of the standard deduction, repeal of the AMT, and the expansion of the child tax credit – benefit millions of Americans across every state, leading to tax cuts and simplification.

These reforms will enable the majority of American families to file their taxes on a postcard.

The GOP Framework Repeals the Alternative Minimum Tax

 

The Republican Tax Reform Framework proposes full repeal of the Alternative Minimum Tax. According to the most recently available IRS data, 4,464,430 taxpayers paid this tax in 2015.

Any taxpayer whose income exceeds the AMT threshold is required to calculate their regular tax burden and the AMT, then pay the higher amount. As a result, the AMT is one of the drivers of complexity in the code.

The AMT was legislated through the Tax Reform Act of 1969. The tax was in response to 155 high-income Americans that paid no federal income taxes. Congress responded by passing the AMT as a “solution.”

Over time, the AMT has expanded in scope to hit a far larger percentage of Americans than was ever intended. In 1970, the tax hit just 20,000 taxpayers, but now it hits almost 4.5 million Americans. Because wages are continuously increasing, the AMT will only continue to impact more taxpayers over time.

As noted in figure 1, the AMT today affects taxpayers in every state. More than 900,000 taxpayers pay the AMT in California and more than 500,000 pay it in New York. In Texas, nearly 250,000 taxpayers pay this tax, while 166,000 pay it in Pennsylvania. The full state breakdown of who pays the AMT can be found in figure 1.

Figure 1: Number of Taxpayers That Pay the Alternative Minimum Tax

 

State Number of filers State Number of filers
United States 4,464,430 Montana 9,730
Alabama 22,740 Nebraska 20,550
Alaska 3,890 Nevada 15,480
Arizona 48,170 New Hampshire 16,370
Arkansas 19,730 New Jersey 279,740
California 901,370 New Mexico 12,270
Colorado 70,890 New York 513,490
Connecticut 103,330 North Carolina 102,000
Delaware 10,720 North Dakota 5,340
Florida 156,410 Ohio 122,050
Georgia 109,540 Oklahoma 28,000
Hawaii 14,750 Oregon 59,230
Idaho 12,720 Pennsylvania 166,590
Illinois 194,780 Rhode Island 15,270
Indiana 46,720 South Carolina 38,870
Iowa 29,910 South Dakota 4,680
Kansas 24,940 Tennessee 28,410
Kentucky 33,890 Texas 236,780
Louisiana 32,200 Utah 24,870
Maine 14,530 Vermont 8,060
Maryland 144,510 Virginia 149,290
Massachusetts 173,500 Washington 67,100
Michigan 91,450 West Virginia 10,550
Minnesota 92,700 Wisconsin 63,380
Mississippi 14,510 Wyoming 3,480
Missouri 54,400 D.C. and Territories 40,590

Source: IRS Statistics of Income, Tax Year 2015

Republicans Propose Doubling the Standard Deduction

The Joint Republican framework proposes doubling the standard deduction. Under this reform, the first $12,000 earned by an individual and the first $24,000 earned by a family is tax free.

This policy change is a key driver of tax simplification, because the increased size of the deduction will mean that taxpayers will choose it over itemizing deductions. Based on some estimates, the number of filers that take the standard deduction will increase from roughly 66 percent of taxpayers to 95 percent of taxpayers.

Doubling the standard deduction will also result in significant tax cuts for the more than 105 million taxpayers that currently choose to take the standard deduction over itemizing when they file their taxes.

Currently, over 9 million taxpayers take the standard deduction in Texas, while more than 7 million taxpayers in Florida choose to take it, according to IRS data. More than 3 million filers in North Carolina and Michigan also take the standard deduction. These taxpayers are one of the biggest winners from the tax reform framework. They are already choosing to take the standard deduction instead of the more complex method of itemizing deductions, and so receive significant tax reduction.

Figure 2: Number of Taxpayers that Take the Standard Deduction

 

State Number of filers State Number of filers
United States 105,055,150 Montana 356,280
Alabama 1,520,920 Nebraska 650,230
Alaska 281,390 Nevada 1,013,060
Arizona 2,076,930 New Hampshire 476,010
Arkansas 954,510 New Jersey 2,574,770
California 11,639,810 New Mexico 710,020
Colorado 1,764,070 New York 6,285,820
Connecticut 1,032,700 North Carolina 3,160,340
Delaware 308,230 North Dakota 300,820
Florida 7,381,270 Ohio 4,130,020
Georgia 2,977,270 Oklahoma 1,246,880
Hawaii 487,460 Oregon 1,193,960
Idaho 518,820 Pennsylvania 4,418,190
Illinois 4,231,140 Rhode Island 354,070
Indiana 2,396,920 South Carolina 1,575,650
Iowa 1,024,420 South Dakota 344,070
Kansas 997,220 Tennessee 2,383,180
Kentucky 1,412,530 Texas 9,284,760
Louisiana 1,532,990 Utah 816,410
Maine 466,830 Vermont 236,940
Maryland 1,604,370 Virginia 2,449,420
Massachusetts 2,142,350 Washington 2,393,070
Michigan 3,463,240 West Virginia 648,040
Minnesota 1,777,460 Wisconsin 1,956,470
Mississippi 953,720 Wyoming 217,580
Missouri 2,057,890 D.C. and Territories 874,630

Source: IRS Statistics of Income, Tax Year 2015

The Joint Framework Expands and Strengthens the Child Tax Credit

 

Currently, the Child Tax Credit allows taxpayers a $1,000 reduction in taxes per child. The child tax credit is key toward ensuring the tax code is pro-family.

The tax reform framework released last week does not specify a level to increase the child tax credit. However, Senator Marco Rubio and special advisor to the President Ivanka Trump have proposed increasing the credit to

$2,500.

Expanding the child tax credit will help millions of Americans across every state. According to the most recent IRS data (figure 3), more than 22 million Americans used the child tax credit in 2015. Under the GOP tax reform framework, these families would see significant tax reduction and simplification. Tax reduction because of the expanded child tax credit, and simplification because they can receive their tax relief through one source rather than having to use multiple deductions and credits.

Figure 3: Number of Taxpayers that Take the Child Tax Credit

 

State Number of filers State Number of filers
United States 22,324,780 Montana 72,100
Alabama 331,870 Nebraska 157,910
Alaska 65,540 Nevada 226,030
Arizona 478,000 New Hampshire 90,820
Arkansas 207,730 New Jersey 563,170
California 2,701,370 New Mexico 150,070
Colorado 400,830 New York 1,151,020
Connecticut 220,450 North Carolina 708,990
Delaware 65,890 North Dakota 59,230
Florida 1,244,430 Ohio 830,770
Georgia 690,130 Oklahoma 294,920
Hawaii 104,070 Oregon 268,640
Idaho 134,800 Pennsylvania 840,120
Illinois 884,790 Rhode Island 69,950
Indiana 514,550 South Carolina 338,400
Iowa 246,080 South Dakota 67,410
Kansas 230,830 Tennessee 466,410
Kentucky 318,720 Texas 2,092,560
Louisiana 321,160 Utah 278,420
Maine 87,670 Vermont 42,460
Maryland 407,120 Virginia 571,710
Massachusetts 407,210 Washington 529,080
Michigan 647,610 West Virginia 119,890
Minnesota 412,780 Wisconsin 430,860
Mississippi 211,210 Wyoming 48,160
Missouri 431,660 D.C. and Territories 42,450

Source: IRS Statistics of Income, Tax Year 2015

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