The Washington Times - April 18, 2011, 01:33PM

The Republican Study Committee (RSC) has released information on this Tax Day illustrating what the American tax payer can expect in terms of possible tax increases if the Bush tax cuts are not made permanent. The RSC also provided interesting new data on the U.S. tax code.

In a press release, Congressman Jim Jordan, Ohio Republican and Chairman of the RSC, released a few factoids about the American tax system including:

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The IRS’s Taxpayer Advocate Service notes that “The Code has grown so long that it has become challenging even to figure out how long it is.” National Taxpayers Union found a total of 3,784,745 words in the most recently issued Tax Code (January 2009).

According to the Tax Foundation, as of 2005 (the most recent data available), IRS regulations contained over 6,958,000 words—an 18.7% increase since 1995 and almost 9 times the total number of words in the King James Bible.

The IRS’s National Taxpayer Advocate estimated in 2006 that taxpayers spend $193 billion each year to comply with income tax requirements. That amounted to 14% of aggregate income tax receipts in that year.

According to the IRS, the form 1040 in the year 1935 was accompanied by a two-page instruction booklet. Taxpayers today must wade through 174 pages of instructions, over quadruple the number in 1975 and over triple the number in 1985, the year before taxes were “simplified.” Today’s short form, at 49 lines, has double the number of lines on the 1945 version of the standard 1040 tax return.The short form’s instructions total 92 pages, more than the long form’s booklet from 1995!

According to NTU, the IRS now lists more than 1,900 publications, forms, and instructions on its website.

In 2009, NTU estimated that the cost for federal tax compliance by corporations was $159.4 billion, which was 54% of the corporate income taxes collected in fiscal year 2008.

62.8% of tax filers used paid preparers in 2006—up from 38.0% in 1980.

FULL LIST

According to the RSC, tax increases in various areas will happen, “if Congress fails to act, including the Bush tax cuts for all wage-earners which expire at the beginning of 2013.” Below are the tax increases the RSC is referring to:  

2011:

The $8,000 first-time homebuyer credit will expire for those serving on qualified official extended duty overseas.

2012:

The one-year employee-share payroll tax cut of 2% will expire (sec. 601).

The exemption for the Alternative Minimum Tax (AMT) will decrease from $46,700 to

$33,750 for single filers and from $70,950 to $45,000 for married couples filing jointly.

State and local general sales taxes will no longer be deductible.

Tax-free distributions from individual retirement plans for charitable purposes will no longer be allowed.

The Work Opportunity Tax Credit, which allows employers to credit up to 40% of the first-year wages of a new employee, will expire.

The 20% credit for basic research expenses and payments will expire.

Increased expensing of depreciable business assets up to $500,000 will revert to a level of $125,000.

The above-the-line deduction for qualified tuition and related expenses will expire.

Premiums paid for qualified mortgage insurance will no longer be considered deductible as interest on a mortgage.

The deductions for donation of “apparently wholesome food inventory,” books to public schools, and computer technology to schools and libraries will expire.

The additional $3,170 credit for adoption of children with special needs will expire ($10,000 credit will remain).

The $250 deduction for elementary and secondary school teachers to purchase supplies for use in the classroom will expire.

Facilities that produce “refined coal” will no longer qualify for the renewable energy production credit.

The $1,500 credit for qualified energy efficiency improvements will expire.

The $2,500 credit for a plug-in electric vehicle will expire.

Several credits for alternative motor vehicles will expire.

The $30,000 credit for a new alternative fuel vehicle refueling property will expire.

The credits for the production and blending of ethanol and alcohol fuel mixtures, and outlay payments for the same, will expire.

Credits for biodiesel producers and blending, and excise tax credits and outlay payments for the same, will expire.

The Indian employment tax credit – 20% of wages and benefits up to $6,000 – will expire.

The new markets tax credit which provides a credit of up to $5 million on investments in community development entities will expire.

The railroad track maintenance credit of 50% of track maintenance expenditures will expire.

The new energy efficient home credit of $2,000 will expire.

The energy efficient appliance credit (varying amounts) will expire.

The mine rescue team training credit of $10,000 will expire.

The credit for 20% of differential wage payments paid to employees put on active-duty as military reservists will expire.

The limitation will drop to $0 for zone academy bonds.

The allowed amount of commuter benefits allowable as a fringe benefit will drop from $175 a month to $100.

Accelerated depreciation for qualified business property on an Indian reservation will expire.

The $15 million deduction for film and television productions will expire.

The alternative fuel and fuel mixture credits and outlay payments for the same will

expire.

2013:

The marginal income tax rates will increase as follows: —35% bracket will increase to 39.6%

—33% bracket will increase to 36% —28% bracket will increase to 31% —25% bracket will increase to 28% —10% and 15% brackets will condense to 15%

The maximum taxable income of the 15% income tax bracket for couples as a percentage of the maximum taxable income for singles will decrease from 200% to 167%—restoring the marriage penalty.

The standard deduction for couples as a percentage of the standard deduction for singles will decrease from 200% to 167%—restoring the marriage penalty.

The personal capital gains tax will increase to 20% and 10% (from 15% and 5%).  Dividends will no longer be taxed at the capital gains rate for individuals, thereby

increasing the double taxation of dividends by as much as 164%.

The “death” tax using the “stepped up” basis will return with a 55% maximum rate (including surtax) and a $1 million exemption, after years of decreasing “death” tax rates, increasing exemptions, and the 2010 tax compromise’s 35% tax rate with a $5 million exemption.

The dependent care tax credit will decrease from $3,000 to $2,400.  The child tax credit will decrease from $1,000 to $500.

The adoption tax credit will decrease from $10,000 to $5,000

Several provisions of the student loan interest deduction, the increase in the phase-out range, the repeal of the limitation on number of months interest is deductible, and the allowance for voluntary, deductible payments of interest will expire.

The maximum contribution to educational IRAs will decrease from $2,000 to $500, the expanded list of allowable distributions will expire, and the marriage penalty for the phase-out range will be reinstated.

The American Opportunity Tax Credit, a partially-refundable expansion of the Hope Scholarship Credit, will expire.

The limitation on the allowable amount of itemized deductions by higher income individuals (the “Pease limitation”) will expire.

The additional depreciation of 50% of basis on qualified property will expire.

Increased expensing of depreciable business assets up to $125,000 will revert to a level of $25,000.

The tax credit for the production of Indian coal will expire.

The cellulosic biofuel producer credit will expire.

The credit of 25% of costs for employer-provided child care will expire.

The election to claim the energy credit in lieu of the electricity production credit for wind facilities will expire.

The special rule for long-term unused credits for those qualifying for the credit for prior year minimum tax liability will expire.

Taxpayers will no longer be eligible to exclude a discharge of indebtedness on their principal residence from their gross income.

The suspension of the section excluding graduate school from allowed employer- provided educational assistance will expire.

The special depreciation allowance for cellulosic biofuel plant property will expire.  The elimination of the phase-out for personal deductions will expire.  The reduced rate of 15% for the accumulated earnings tax will expire.

2014:

Transfers of excess assets in a definite benefits plan to a health account for retirees will no longer be allowed.

Accelerated depreciation over three years of race horses less than 2 years old will expire.

The placed-in-service date limit will be reached for the electricity production credit.

The election to claim the energy credit in lieu of the electricity production credit for wind facilities will expire.

The deduction of $1.80 per square foot for energy efficient commercial buildings will expire.