Columbia University law professor Michael Graetz introduced his “Competitive Tax Plan” more than a decade ago and has now updated it. Broadly, the plan shifts...
Exact-Withholding System In this variation, the tax agency attempts to withhold the exact amount of taxes due from paychecks and other income so that no...
Drawbacks to a return-free system include a potentially heavier administrative burden on employers and other businesses charged with withholding income tax, and on state and...
Although many countries have adopted return-free tax systems, most of them have simpler tax codes than the United States. Implementing a return-free system that most...
The size and scope of a return-free system would depend on its administrative and structural features. At best, some 50 million would qualify. This group...
While some anti-tax groups have suggested otherwise, a return-free system would not raise taxes for households already paying all the taxes they owe. Nor would...
California operated a pilot program for return-free tax filing in tax years 2005 and 2006. Some 50,000 prescreened Californians who had previously filed as single...
Nearly all countries that offer return-free systems have “exact-withholding” systems, of which there are two types: “cumulative” systems (used in the United Kingdom and Russia)...
ACA tax credits for health insurance The Affordable Care Act (ACA) provides families with refundable tax credits to purchase health insurance through both state and...
The current US system treats multinational enterprises whose parent companies are incorporated in the United States (US-resident multinationals) differently from those that are resident elsewhere...
American Opportunity Tax Credit The American opportunity tax credit (AOTC) provides a credit up to $2,500 per student during the first four years of undergraduate...
Health care FSAs are benefit plans established by an employer to reimburse employees for qualified health care expenses, such as copayments and certain prescription drug...
Several recently proposed tax reforms would, indirectly, reduce incentives for charitable giving. These reforms include reductions in marginal tax rates, caps on total itemized deductions,...
Charitable Giving by Itemizers and Nonitemizers An income tax deduction for charitable giving is available only to taxpayers who itemize their deductions. Estimates from the...
Taxpayers can claim a standard deduction when filing their tax returns, thereby reducing their taxable income and the taxes they owe. In addition to the...
Taxpayers can either take a standard deduction or itemize their deductions to reduce the taxable income on their federal income tax return. Taxpayers typically choose...
THE STANDARD DEDUCTION The Tax Cuts and Jobs Act (TCJA) increased the standard deduction from $6,500 to $12,000 for individual filers, from $13,000 to $24,000...
Before 2018, taxpayers could claim a personal exemption for themselves and each of their dependents. The amount would have been $4,150 for 2018, but the...
TAX CREDITS Tax credits are subtracted directly from a person’s tax liability; they therefore reduce taxes dollar for dollar. Credits have the same value for...
