Kerby Anderson

The tax reform bill making its way through Congress may be a slight improvement over the existing tax code, but just barely. Columnist George Will reminds us that the best solution would be to “repeal and replace the tax code.” There is a bill in Congress that would actually do that but it won’t ever get an up-or-down vote.

The “Tax Code Termination Act” would delete the 4-million-word code as of December 31, 2021 and require that Congress replace it with a new one by July 4 of that year. George Will says it could just as easily be called the “Mitch Daniels Act.” Daniels was the head of the Office of Management and Budget who wished the tax code “looked as though it had been designed on purpose.”

One statement by George Will in his column got my attention. He says that 62 percent of American households pay more in payroll taxes than in income taxes. He also added that 45 percent of American households pay no income tax. That’s when I decided to dig into the numbers provided by the Tax Policy Center.

Nearly 36 percent pay more in payroll taxes than income taxes, and an additional 26 percent pay no income taxes but do pay payroll taxes for a total of 62 percent cited by George Will. When you add the 18 percent who pay neither income taxes nor payroll taxes to the 26 percent who pay payroll taxes but no income taxes, you get the total of 45 percent of American households who pay no income tax.

The tax reform bill would double the standard deduction to $12,000 for individuals and $24,000 for married couples. This change will increase the number of people who will not have to pay income taxes. That will make it even harder to ever get tax simplification because even fewer Americans will be affected by the tax code.