Friday, November 3, 2017

Republican elimination of personal exemptions gives me an idea for truly revolutionary tax reform

In 1913 when the income tax began there was no such thing as the standard deduction. That didn't come along until 1944.

The original income tax was a class tax, a tax on the wealthy, just as was the corporate tax instituted in 1909. From the beginning it came with a personal exemption of $3,000 and if you were married $4,000. Dependent exemptions didn't begin to be added until 1917, starting at $200.

Guess what the personal exemption of $4,000 would be in 2016, adjusted for inflation? $100,000. Times all the individual wage earners in America in 2016 $16.3 trillion would be exempt from taxation. In the third quarter of 2017, personal income in the United States wasn't even $16.5 trillion. 

In other words, the original personal exemptions of the tax code adjusted for inflation would exempt all current personal income from taxation, except for maybe $200 billion.

As far as I'm concerned, the government can have that.

Now that's what I call a tax reform.