To: "homestead AT lists.ibiblio.org" <homestead AT lists.ibiblio.org>
Subject: [Homestead] Tax-reform proposals, dead on arrival?
Date: Thu, 27 Oct 2005 05:06:01 -0500
This is from this early mornings Gray Lady, with which many of you astutes
refuse to register, fearing dire consequences, so I offer it in full herewith:
Editorial
Tax Reform for Another Day
Published: October 27, 2005
Nearly 30 years ago, in the waning days of the Ford administration, a
compendium of tax-reform proposals entitled "Blueprints for Basic Tax
Reform" was pronounced dead on arrival in government offices throughout
Washington. A decade later, many of the ideas bore fruit in the vast and
generally constructive Tax Reform Act of 1986.
The final report of President Bush's tax reform panel, due Tuesday, may
have a similar fate. Popular discontent with advance word on its
recommendations is sure to spook Congress into inaction in the coming
election year, especially on proposals to limit the mortgage-interest
deduction, abolish the deduction for state and local taxes, and reduce the
write-off for employer-provided health insurance.
Tackling a job as challenging as tax reform in a serious and fair way
requires exceptional leadership. Even if Mr. Bush has the desire and
ability to take on such a task, there is the danger that the midterm
elections will leave him too much of a lame duck to do it. Bipartisanship
is also essential to rewriting the tax code, and that is hardly this
president's strong suit. Mr. Bush is not even likely to have the support of
his own right wing, which wants a less progressive tax code than the panel
envisions.
That's fine with us. The panel's expected report deserves the death
sentence that awaits it - but not because it's entirely unworthy. The panel
appears to have done an admirable job of addressing many difficult issues
in a competent way. Even the limits on popular deductions, which have
inspired visions of a dagger pointed at the heart of the middle class, are
not as objectionable when combined with other proposed changes that would
make up for the loss of valuable write-offs for working Americans.
What damns this particular effort are the constraints placed on it from the
outset. Mr. Bush directed the panel to assume that the temporary tax cuts
passed during his first term - which mainly benefit the wealthy - would be
made permanent, rather than expiring as scheduled in the next two to four
years. The president also told the panel that a reformed tax code should
raise the same amount of revenue that would be raised by a tax system in
which his tax cuts had been made permanent.
Those assumptions build in a huge cut in future revenues that would ensure
never-ending deficits and, with them, either tax increases to narrow the
gap or sharp reductions in vital government programs like Medicare and
Social Security. In fact, the cost of making the tax cuts permanent is
three times as large as the long-term shortfall in Social Security.
The country needs a better tax system. But the president's insistence on
making his tax cuts permanent has undermined his panel's efforts to address
long-term needs.
The short-term answer, however, is simple: Congress must stop the bleeding
from this administration's reckless tax-cutting agenda.