Abstract

http://ssrn.com/abstract=1636007
 
 

Footnotes (422)



 


 



Doing Too Much: The Standard Deduction and the Conflict Between Progressivity and Simplification


John R. Brooks II


Georgetown University Law Center

June 23, 2011

Columbia Journal of Tax Law, Vol. 2, p. 203, 2011
Harvard Public Law Working Paper No. 10-39
Georgetown Public Law Research Paper No. 11-89
Georgetown Law and Economics Research Paper No. 11-11

Abstract:     
In U.S. federal income tax, the standard deduction, along with the personal exemptions, provides taxpayers with a minimum amount of untaxed income, effectively creating a “zero bracket amount.” For historical and political reasons, however, the standard deduction also operates as a simplified substitute for the itemized deductions, such as the deductions for extraordinary medical expenses, charitable contributions, and home mortgage interest. This seemingly reasonable compromise in fact leads to substantial, and surprising, conceptual complexity. In particular, close analysis of each of the two roles shows that their effects, and related criticisms, are often contradictory, which in turn makes it difficult to have coherent debates regarding the proper roles of the standard deduction and the personal deductions.

This article argues that, while the standard deduction is worse than we think it is, it is also easier to fix than we think it is. We can replace the standard deduction with a true, independent zero bracket amount and a floor under the itemized deductions while staying revenue-and distribution-neutral. This would effectively divorce the two roles of the standard deduction – zero bracket amount and simplification of the itemized deductions – leading to more coherence in individual income taxation and giving more flexibility to policymakers. This article proposes further to disaggregate the single floor under the itemized deductions into multiple, independent floors under each itemized deduction. This also would lead to greater coherence and flexibility in tax system design. While creating multiple floors would marginally increase complexity for some taxpayers, the costs of such complexity are overstated relative to the benefits of more accuracy and coherence.

Number of Pages in PDF File: 45

Keywords: individual income tax, standard deduction, tax reform, progressivity, tax simplification, tax deductions

JEL Classification: H20, H23, H24, K00, K34

Accepted Paper Series


Download This Paper

Date posted: July 7, 2010 ; Last revised: June 25, 2011

Suggested Citation

Brooks, John R., Doing Too Much: The Standard Deduction and the Conflict Between Progressivity and Simplification (June 23, 2011). Columbia Journal of Tax Law, Vol. 2, p. 203, 2011; Harvard Public Law Working Paper No. 10-39; Georgetown Public Law Research Paper No. 11-89; Georgetown Law and Economics Research Paper No. 11-11. Available at SSRN: http://ssrn.com/abstract=1636007

Contact Information

John R. Brooks II (Contact Author)
Georgetown University Law Center ( email )
600 New Jersey Avenue, NW
Washington, DC 20001
United States
Feedback to SSRN


Paper statistics
Abstract Views: 946
Downloads: 186
Download Rank: 94,957
Footnotes:  422

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.453 seconds