Tax Reform Continues to Produce Positive News
The Tax Cuts and Jobs Act (TCJA) has provided much-needed tax relief to working people—a key selling point leading up to passage of the law. However, the act’s advocates also touted simplification of the tax code as reason to embrace the historic reform.
Now, a new analysis from the Tax Foundation quantifies this benefit, placing estimated savings from a reduction in tax compliance costs between $3.1 billion and $5.4 billion annually. These resources households and business owners spent complying with the tax code could soon be diverted to more productive activities like creating wealth or funding charitable causes.
The billions in additional savings is the result of fewer people projected to file their taxes with itemized deductions, which can take hours to prepare. Instead, more filers will take advantage of a higher standard deduction, thereby avoiding the tedious process of itemization. According to the Joint Committee on Taxation, the number of itemized filers will fall by nearly 30 million households.
Additionally, these changes will largely benefit individuals and families with low and modest incomes.
The Tax Foundation also published an analysis of TCJA’s impact on job growth over a 10-year period, predicting Pennsylvania could add more than 49,000 full time equivalent jobs by 2027. This analysis builds on the foundation’s past work, which estimated job growth figures for 2018.
Overall, the Tax Foundation has provided invaluable information about federal tax reform, demonstrating the positive ripple effects it will have throughout the country over the next decade. Fortunately, Congress is already considering “tax reform 2.0” to build on the good reforms instituted by the TCJA.
Federal tax reform isn’t enough, however. State lawmakers need to provide relief to Pennsylvanians. The state’s stifling tax burden is destroying jobs and driving people away. If we want to make the commonwealth a place where more people want to live and work, government needs to take less so we can do more.