Tax Reform

Go to the Tax Policy Center to learn about the Bush tax reform proposals:

Tax Policy Center | News & Events: ON OCTOBER 18, 2005, the President's tax reform panel released recommendations eliminating a host of special tax breaks and streamlining the filing process. Tax Policy Center scholars have played a fundamental role in guiding the panel's tax reform recommendations, including testifying before the panel on return-free tax systems, fair reform for families, reforming the individual Alternative Minimum Tax, and issues resulting from a consumption tax base. Additionally, the Tax Policy Center has conducted extensive research on many of the options considered by the panel...

And go to the Carpetbagger Report to see some fur fly:

The Carpetbagger Report
: 'Tax reform' may be even less popular than 'Social Security reform': Geography is but one of many problems for this would-be proposal. Kevin did an excellent job summarizing (with a nice table) who's likely to benefit most from all this restructuring and "simplification." I don't want to spoil the surprise, but I'll give you a hint: it's not middle- or lower-income families.... On the left, we have folks like Sen. Chuck Schumer (D-N.Y.), among others, calling it a "dagger to the heart." But that's nothing compared to what the right has been saying.

• Phil Kerpen, policy director of the Free Enterprise Fund, said, "The panel, in its primary focus, seems headed away from its mission to develop a plan for fundamental tax reform." He accused the panel of "a series of tax hikes on the U.S. middle class to balance out relief for upper-income elites."
• Leo Linbeck, who wants a federal retail sales tax, called Bush's commission a "fraudulent political theater designed to protect the corrupt tax code and those who profit from its manipulation."
• Larry Hunter, chief economist for the Free Enterprise Fund, said, "If George Bush thinks he has problems with Harriet Miers, wait until it dawns on people that his tax-reform panel is recommending a huge tax cut for rich people in blue states and a huge tax increase for middle-class folks in the red states."

...The last time such sweeping changes were made in tax law was in 1986. Enactment of that measure required the unqualified commitment of President Ronald Reagan, then at the peak of his popularity; the political mastery of his Treasury secretary, James A. Baker III; the work of a bipartisan coalition in Congress that included many of the most influential senators and representatives; and two years of intensive maneuvering and horse trading.

Comments

[Barkley Rosser]

Bush actually had the opportunity to do a serious and useful tax reform earlier this year when he still had his big pile of political capital. He could have emulated his mentor, and could have even done him better.

As it is, he blew his political capital on a useless effort to resolve a non-crisis in social security, and now, of course, he has very little left, with Iraq a mess and chunks of his administration about to be under indictment, not to mention all the hurricane messes. Whatever will come out of this commission of his will be a pathetic joke that will go nowhere. It really is too bad, but hardly surprising.

[trostky]

Larry Hunter, chief economist for the Free Enterprise Fund, said, "If George Bush thinks he has problems with Harriet Miers, wait until it dawns on people that his tax-reform panel is recommending a huge tax cut for rich people in blue states and a huge tax increase for middle-class folks in the red states."

Funny, didn't Kevin Drum say the proposals were an obvious ploy to put a dagger in the heart of the blue states? Is their paranoia all around? If so, W. should worry about the paranoid right-wingers.

[Gwailo]

The proposals would solve" the Alternative Minimum Tax problem by changing the regular tax system so it would work the way the AMT does now -- no deduction for state/local taxes, no deduction for employment or investment expenses. Also, no deduction for catastrophic uninsured medical expenses, casualty losses, alimony payments etc. See the "simplified" (barely legible) sample forms now online at: http://www.taxreformpanel.gov/meetings/docs/10182005_forms.ppt

It's not so much rich vs. poor as it is red states over blue states, income from capital over income from work, and creditors over debtors.

Prediction: "This plan has about the same chance as a mouse in a cat farm."

[anne]

The proposals of the tax panel are about as self-destructive and strange as could be imagined. The panel will soon be no more, the report delived and heard about no more. Imagine at this time ending the tax subsidy for mortgage interest. Please.... All that must be done for the present is to set aside the Alternative Minimum Tax as it effects middle income households.

[anne]

http://www.nytimes.com/2005/10/19/opinion/l19tax.html

Politicians, Forewarned

To the Editor:

I invested a great deal of money to buy an apartment in Brooklyn last year. One of the principal reasons I was able to do so was that my mortgage interest deduction made the purchase more comparable to my previous cost for renting.

If any elected official tries to weaken the benefit of the mortgage interest deduction, he should be prepared to reap the whirlwind at the ballot box from furious voters.

Max Robins
Brooklyn, Oct. 12, 2005

[Slocum]

"The proposals would 'solve' the Alternative Minimum Tax problem by changing the regular tax system so it would work the way the AMT does now -- no deduction for state/local taxes, no deduction for employment or investment expenses. Also, no deduction for catastrophic uninsured medical expenses, casualty losses, alimony payments etc."

Yes -- but for that reason, the package largely represents what's going to happen anyway if we don't do anything and allow more and more taxpayers fall into the AMT every year. The AMT already hits taxpayers in blue states much sooner and harder than those in red states.

[Barkley Rosser]

Yes, the one thing out of this commission that might actually happen is either elimination or major change of AMT, but that would probably have happened anyway without any commission recommending it. The AMT sticks out as an increasingly unpopular part of the system, although The Economist at one point recommended simply making everybody subject to it as one way to achieve a very broad tax simplification.

[anne]

The AMT will simply be set aside, though possibly year to year since keeping the AMT year to year allows for better budget projections. But, blue or red makes no difference, there will be no tax increases by this Republican Congress and Administration and the AMT will be set aside. Republicans like being elected so the idea of a tax increase red, blue or green is absurd.

[Slocum]

"But, blue or red makes no difference, there will be no tax increases by this Republican Congress and Administration and the AMT will be set aside."

I don't think so. Setting the AMT aside would blow a huge hole in the budget (which, of course, is already full of holes). And blue or red does make a difference -- the AMT is a stealth tax that really works in favor of Republicans. By leaving the AMT in place, it will tend to incite tax revolts against high state and local taxes in blue states and might even, in the process, help flip some close sttes from blue to red. Much better for Republicans to propose a major tax overhaul that would have overturned the AMT and have it shot down by the Dems. Then the Republicans can run on being anti-AMT and blame its continued existance on the Dems while reaping the benefits of its selective effects on blue states.