As the US congress continues to debate and formulate a new tax plan—in part with the stated goal of simplifying the US tax system—let’s consider a simple metric for the system’s complexity: pages of instructions.
Although the current US income-tax return form (the 1040) is only two US-letter-sized pages (and a simplified version is a single page) it’s by no means self explanatory. The instruction booklet for how to fill out Form 1040 is 106 pages long.
Include the instructions for nine commonly used additional forms—Form 8949, and Schedules 8812, A, C, D, E, F, R, and SE—and the total comes to 214 pages in the most recent tax year. Previously, instructions for all these forms were included in the 1040 instruction booklet. Only in the last three years have they been separated. These extra forms are not unusual; they include the paperwork for claiming child-based credits and reporting capital gains, for example.
In introducing the new Republican tax plan in August 2017, Paul Ryan, the speaker of the House of Representatives, held up a postcard which he said would replace the current US-letter-sized, two-page form. As Vox pointed out at the time, there wasn’t even a place for your name on Ryan’s mock-up, let alone room for any instructions.
Republicans have long advocated for a simpler tax system. The bills under consideration right now don’t do that. For every piece of simplification, there’s a new wrinkle. While the per-family-member deduction known as the personal exemption is eliminated, taxpayers will still need to calculate their eligibility for the expanded child tax credit. While the alternative minimum tax—which forces some filers to calculate their taxes in two different ways—is eliminated, pass-through income from an S corporation will be taxed under new rules at a separate rate rather than at wage rates.
While many more US taxpayers could forego the complexity of itemizing their return due to a proposed larger standard deduction, others would be faced with new instructions on phase-outs and means-tests. The plans might not be making taxes simpler, but its supporters are betting it’ll let more taxpayers skip more pages of the instruction booklet.