Max Sawicky notes an interesting “fun fact” from an article by Adam Carasso and Gene Steuerle in the subscription-only Tax Notes: restoring the $3000 personal exemption on the income tax to its 1948 purchasing power would exempt a family of four from any income tax liability unless its income was more than $50,000 per year.
But why treat this as just a “fun fact”? Why isn’t it the perfect Democratic counterweight to the Bush tax cuts? Restore the inheritance tax above the $5 million level, and undo the cuts in the top brackets, to pay for a big increase in the personal exemption. (Max suggests refundable credits instead, which has huge substantive value but almost certainly less political pizzazz.
If Carasso and Stuerele cost out this proposal, Max doesn’t give us the answer, but costing it out shouldn’t be hard.)
Sounds like something for one of our Presidential candidates to pick up and run with.
Correction As a reader pointed out, the personal exemption was only $600 in 1948, so marking it up for inflation would only bring it to $4400 (compared to the current $3000). The Tax Notes article (and Max Sawicky’s post, which was perfectly clear but which I simply misread) talked about indexing the exemption to median personal income, which is up a little less than threefold (after inflation) since 1948.