AEI Tax Brief: Repealing the Personal Exemption

Alex Brill | AEI Tax Brief

Current Policy
Under current law, a taxpayer can claim a personal exemption for themself, his or her spouse, and each qualified dependent. The personal exemption amount for 2017 will be $4,050. The actual benefit depends on the taxpayer’s marginal tax rate and gross income. Taxpayers can also claim a standard deduction as an alternative to itemizing deductions. In 2017, the standard deduction will be $6,350 for single filers, $9,350 for head-of-household filers, and $12,700 for married couples filing jointly.

Reform Options

Using the open-source Tax-Calculator, I present the results of two modifications to current law:
(1) repeal all itemized deductions (IDs) except the mortgage interest deduction and the charitable deduction while doubling standard deduction (SD), or (2) the changes in (1) plus repeal of the personal exemption (PE). These reforms are implemented in each iteration of the model.

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