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U.S. President Donald Trump signs the $1.5 trillion tax overhaul plan into law in the Oval Office of the White House on De...

How transformative is the tax bill, really?

The tax overhaul that President Donald Trump signed into law on Friday includes a complex and wide-ranging set of changes to the tax system — and has left many Americans wondering exactly how they’ll be impacted when the law goes into effect at the start of next year.

How big a deal is the tax law? Can taxpayers really file their taxes on something the size of a postcard, as Republican lawmakers insist? And how will the changes impact Trump? We spoke with Mark Mazur, the director of the nonpartisan Tax Policy Center, for his take on the law and how it’ll impact Americans starting in 2018. The conversation has been edited for length and clarity.

DANIEL BUSH: How transformative is this tax bill? Is it a milestone piece of legislation?

MARK MAZUR: For the average taxpayer, the jury’s out on this. Proponents say it will turbocharge the economy. That’s an article of faith among the proponents. We’ll see if the evidence bears out. I think for most mainstream economists, that seems much more like thinking optimistically and hoping everything breaks your way.

DANIEL BUSH: President Trump has consistently called this the biggest tax cut in history. Is that true?

MARK MAZUR: The Treasury Department has a document that looks at past tax cuts by size of GDP, and this would not be at the top of that list.

DANIEL BUSH: How long will it take for all of these changes to take effect?

MARK MAZUR: Most of the tax changes take place on Jan 1, 2018, and they apply to tax year 2018. For most taxpayers, they may see a change in their withholding in the first quarter of 2018. But lots of things move. People get pay raises, see changes in employer-provided health care, see changes in retirement benefits. Withholding would be one more thing that moves. Whether or not people recognize the changes and tie them to the tax bill is an open question. Most everything else happens when people file their tax returns in 2019. At that point, they’ll have to add things up and see where they wind up.

DANIEL BUSH: Trump has also called the tax bill a “Christmas gift” for the middle class. When will middle class Americans actually see a benefit in their bank accounts?

MARK MAZUR: The fastest that most people will see it is when withholding tables change and the amount of their paycheck changes in 2018. We have also seen some companies say they’ll provide a one-time bonus as a result of this tax bill. We’ll see how prevalent that becomes.

DANIEL BUSH: When will corporations see benefits?

MARK MAZUR: Probably this week, corporate tax accounts and lawyers will be poring over the bill to see what it means for them. Next time they do earnings calls, people will be asking what it means so they’ll have to have an answer to that. To the extent that it increases cash flow, corporations will have to figure out what to do with it. It could lead to share buybacks, paying higher dividends, buying or acquiring other firms, or making larger capital investments. We’ll see how they’ll play out over the course of the year.

DANIEL BUSH: Will the tax code really fit on a postcard, as Republicans like to say?

MARK MAZUR: Basically, for people with very simple situations, you could imagine having a very simple form like the current 1040EZ, which is an 8-by-11 piece of paper that’s like a giant postcard. But for most people, it’s not feasible to have all the information that’s necessary on a postcard. People who claim the Earned Income Tax Credit have to file a worksheet. People who claim itemized deductions file a separate schedule. People who have more than $400 of interest or dividend income have a separate schedule. For all those people, a postcard is not really a realistic option. Even House Speaker Paul Ryan probably couldn’t file his personal return on a postcard.

DANIEL BUSH: How many Americans actually file their own taxes, as opposed to having them done by a professional?

MARK MAZUR: Roughly about half use a paper preparer. A little more than another third use software on their own. A few percentage points use the IRS free file program or volunteer income tax assistance programs for low-income people. You’re down to 15 percent of people who, like in the old days, sit down at the kitchen table with a pencil and paper. There aren’t that many.

DANIEL BUSH: Will it be easier to file taxes next year?

MARK MAZUR: For people who keep their records and claim itemized deductions that are a little over the current standard deduction, their lives will probably become simpler because they’ll be a larger standard deduction. The Tax Policy Center has estimated that somewhere around a third of people itemized today. That number will go down to 10 percent.

DANIEL BUSH: Overall, does it make the tax code easier to understand?

MARK MAZUR: Largely, it’s about the same level of complexity. For every situation where you say, “We’re going to make people’s lives easier and more straightforward,” there’s always something on the other side. One thing as an economist that I look at is that very few people know what their marginal tax rate is with any degree of certainty and make economic decisions based on that. That’s going to be exactly the same under the new law. We’re keeping largely the same tax structure. The bill is making some changes, as we discussed. But the types of really difficult tradeoffs that we need to reform the tax code, they’re not included in this bill.

DANIEL BUSH: Are there easy ways for people to get around some of changes?

MARK MAZUR: I don’t think there are easy ways to do that. Because this bill was pushed through so hastily, the public didn’t have an opportunity to sort of pressure test these components. We don’t know what the behavioral implications are going to be. Whether they work in the short run or the longer run, it’s a little unclear.

DANIEL BUSH: Are you relieved the tax bill negotiations are over? Do you feel whiplash that it happened so fast?

MARK MAZUR: Things happened very quickly. At least from a standpoint of analysts, it’s going to take a few months for people to largely comprehend what’s in the bill, what the implications are, AND what type of response we can see.

DANIEL BUSH: Ok, so now the bill is done. But is it really done? How much of the law will change?

MARK MAZUR: That’s really, really hard to predict. In prior tax legislation, we’ve almost always seen a technical correction come out a year or sometimes more after the bill becomes law, as people begin to understand the implications. We’ll see a similar process here.

DANIEL BUSH: Why is it so hard for Congress to predict what the implications will be?

MARK MAZUR: Doing things like changing the tax rates from 15 to 12 percent or something like that, people in Congress know how to do that. That’s not a huge lift. But when you do things like create a whole new regime for taxing multinational firms that no one else in the world uses, it’s unlikely that the first time you do that, you get it right.

DANIEL BUSH: Finally, how will the tax bill impact Trump?

MARK MAZUR: We don’t know. That’s the true answer. People can speculate on that. But it doesn’t seem helpful to me to engage in that speculation. My guess is, he’s a high-income person, I think he’ll be OK.