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Tax Policy Aspects of the Code, 30 New York University Law Review 227 (1955)


I don't know if my experience has been typical, but while the Internal Revenue Code of 1954 has taken me to many more tax institutes than usual, I have been asked very few questions about it at cocktail parties. The fact is that the new law, described as "the first comprehensive revision of the internal revenue laws since before the turn of the century," will affect the man in the street less directly than any other major tax bill in recent years. Aside from changes in rates and dependency allowances, the reforms that the average taxpayer has felt in the recent past have been the tax withholding system, the requirement of a declaration of estimated tax, the optional standard deduction, the splitting of income on joint returns, and the head-of-household provision. The only 1954 change of similarly widespread interest is the abolition of the $600 gross income limit for dependent children. The $50 dividend exclusion ought to be of general interest, but for many lower bracket taxpayers it merely legalizes a sub rosa exclusion, saving them from a twinge of conscience but putting no money in the bank. The deduction for child care expenses will probably disappoint more taxpayers than it will please; and the retirement income credit is granted only to taxpayers over the age of sixty-five and even to this group it is less important than the 1948 grant of an extra personal exemption. Of the other 1954 changes, the modifications of the deductions for medical expenses and depreciation are each estimated to affect nearly ten million taxpayers, but skepticism of these claims is not unreasonable.

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