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1 1 (September 2017)

handle is hein.amenin/aeiaazi0001 and id is 1 raw text is: Powered by Open Source Policy Modeling Repealing the Personal Exemption Alex Brill I September 20, 2017 1 Tax Brief Series 1 Current Policy Under current law, a taxpayer can claim a personal exemption for themself, his or her spouse, and each qualified dependent. The personal exemption amount for 2017 will be $4,050. The actual benefit depends on the taxpayer's marginal tax rate and gross income. Taxpayers can also claim a standard deduction as an alternative to itemizing deductions. In 2017, the standard deduction will be $6,350 for single filers, $9,350 for head-of-household filers, and $12,700 for married couples filing jointly. 2 Reform Options Using the open-source Tax-Calculator, I present the results of two modifications to current law: (1) repeal all itemized deductions (IDs) except the mortgage interest deduction and the charitable deduction while doubling standard deduction (SD), or (2) the changes in (1) plus repeal of the personal exemption (PE). These reforms are implemented in each iteration of the model. Policy Taxpayers Itemizers Taxpayers Taxpayers 10-Year Receiving (millions) Facing Lower Paying Zero Revenue Tax Cut Marginal Tax or Less Change, (millions) Rate Income Tax Dynamic (millions) (millions) (billions) Current Law 0.0 44.6 0.0 70.8 $0.0 Repeal ID & 86.1 10.1 48.6 82.2 $6.4 Double SD Repeal ID, 58.2 8.8 27.9 73.3 $1,580.3 Double SD, & Repeal PE 3 Comments The budgetary difference between those two reform options - whether or not the repeal of the personal exemption is included - is $1.57 trillion over 10 years. Under current law, 111.9 million taxpayers are expected to claim the standard deduction, and 44.6 million are expected to itemize their deductions in 2017. When most itemized deductions are repealed, the standard deduction is doubled, and the personal exemption is kept in place, the number of itemizers decreases from 44.6 million to 10.1 million, and 48.6 million taxpayers face a lower marginal rate. If the personal exemption is also eliminated, 27.9 million fewer taxpayers receive a tax cut and 20.7 million fewer will face a lower marginal rate.

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