NCPA - National Center for Policy Analysis

Taking The Standard Deduction

March 29, 1999

When Congress makes major changes to the nation's tax laws, the proportion of Americans who take the standard deduction -- rather than going through the agonies of itemizing -- jumps up.

Joel Slemrod, director of the Office of Tax Policy Research at the University of Michigan Business School, calls the U.S. personal income tax system "probably the most complicated in the world."

Here are how those complications Slemrod identifies have affected itemization:

  • The standard deduction was first introduced in 1944, at which time about 17 percent of Americans stayed with itemization.
  • By the time of the 1969 Tax Act, almost 50 percent of Americans had come to itemize their returns -- a proportion which dropped quickly through the mid-1970s.
  • At the time of the 1982 Tax Act, about four in ten were itemizing their deductions -- a figure which thereafter quickly fell to about three in ten.

Direct and indirect costs -- such as accounting fees and taxpayers' time -- of complying with the personal income tax code are running at over 8 percent of the money Washington gets from it.

Source: Peter Brimelow, "Itemized Headache," Forbes, April 5, 1999.


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