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Today’s Tax Reform Cost – How Much is $1.5 Trillion?



A budget agreement that preceded current tax reform efforts included that tax reform can “cost” up to $1.5 trillion over ten years (H.Con. Res. 71).

Key actions and votes on this resolution:

  • 10/5/17 – passed in House by 219-206
  • 10/19/17 – passed in Senate by 51-49
  • 10/26/17 – Senate amendment passed in House by 216-212

Also see:

  • House Budget Committee summary and explanation of 11/7/17
  • House Budget Committee news on Senate-Passed Budget Resolution (10/24/17)

Observations:

  • The passage of the budget with the $1.5 trillion for tax reform was slim in both House and Senate. What does this mean for tax reform? H.R. 1, Tax Cuts and Jobs Act passed on 11/16/17 in the House by 227-205 (13 Republicans voted against it). What might happen in the Senate?
  • A $1.5 trillion deficit over ten years divided among the 325,365,000 people in the U.S. comes out to $4,610 per person or $461 per year per person.  I’m reminded of an article in The Atlantic in May 2016, “The Secret Shame of Middle-Class Americans,” that almost half of Americans could not put their hands on $400 for an emergency. So, seems that not only does this sound like a lot of money, it is even when it comes down to every person (of all ages) in the U.S.
  • What about $1.5 trillion spread out over the 148,840,642 individual income tax filers we have (for 2015)? That comes out to $10,078 per individual filer over 10 years or $1,008 per year per individual filer.

Have a question? Contact Annette Nellen

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Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.

Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.

Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.

Prior to joining SJSU, Annette was with Ernst & Young and the IRS.

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