The Best Single Change to the Tax Code? We Have 7 Ideas
A Tax Day wish list, from lowering the estate tax threshold to doubling a tax credit for childless adults.
Tax Day could be more of a relief in the future.
Photographer: Daniel Acker/BloombergThe Tax Cuts and Jobs Act of 2017 left some Americans celebrating their gains, others decrying losses, and a good chunk of the nation unsure of what to think, actually. That’s to be expected – it will take time to understand the true impact of such sweeping changes. For Tax Day, we posed a simpler question to our columnists: What single change in tax policy would do the most good for the nation? They offered the following suggestions.
Make the Tax Credit for Children Permanent
Perhaps the most popular feature of the tax law Republicans enacted in 2017 was its modest provision of tax relief for parents. The law eliminated the dependent exemption but expanded the tax credit for children by more than enough to make up for it. But the law made this pro-parent tax cut temporary. Republicans defended making it temporary on the theory that a future Congress would find it politically imperative to extend it.
I hope it will. Congress should make the enlarged tax credit for children permanent and make it grow automatically as nominal wages rise. Parents, and especially parents of larger families, pay too large a share of the costs of modern government. The tax credit is already too small to offset this tendency, and should not be allowed to shrink further. RAMESH PONNURU
Take Down the Stepped-Up Basis
The tax law doubled the threshold at which the estate tax kicks in -- making it even more essential to do away with a decades-old capital gains loophole for wealthy heirs. Known as stepped-up basis, the tax code lets heirs drastically reduce their tax bills for inherited assets by ignoring any gains before they acquired them. That means any appreciation of those assets during the original owner's lifetime could potentially escape taxes entirely if the estate is below the new $22 million estate tax limit for married couples. It's hard to make the argument that changing the tax treatment of inherited wealth will somehow inhibit economic growth. Instead, the loophole is really just helping the rich get richer. Of course, other changes would be needed to complement an end to stepped-up basis and help to reform the estate tax system, but targeting this giveaway is a good place to start. The president even seemed to think so too, at one point. ALEXIS LEONDIS