10 November 2005

Tax Reform Panel Plans Going Nowhere.

From a story found via the Tax Profs blog:

Republican congressional leaders don't want to confront voters in an election year with hard choices such as trimming homeownership tax breaks to help abolish the alternative minimum tax, as a presidential panel has recommended, according to strategists. Their uncertainty is magnified by a lack of guidance from Bush's administration, which hasn't commented on its panel's recommendations.

This hesitation is at odds with the ambitions of House Ways and Means Committee Chairman Bill Thomas, who has only one year remaining as head of Congress's most powerful tax-writing panel before he is forced by House Republican rules to vacate his post.

``Thomas is definitely going to want to take it up and try to do something simply because it's his last year as chairman,'' said former Texas Congressman Bill Archer, who was Thomas's predecessor as Ways and Means Committee chairman. . . .

Republicans also realize they can't complete a rewrite of the tax code without some cooperation from Democrats. . . .

So far, Democratic leaders such as House Minority Leader Nancy Pelosi have been solidly opposed to the tax panel's proposals. . . . The [Bush Administration] silence also contrasts with the administration's embrace of the findings of the 2001 Presidential Commission to Strengthen Social Security, which Bush used as a basis to promote his unsuccessful proposal to allow workers to invest part of their payroll taxes in investment accounts. . . . Texas Representative Tom DeLay assailed the panel's proposals in an opinion article published in the Washington Post on Nov. 4. The recommendations, he wrote, lack ``vision'' and ``boldness.'' . . .

Thomas has reacted favorably to the panel's work. In a Nov. 2 interview, he expressed enthusiasm for proposals to tax employer-provided health benefits over about $11,500 and indicated he was open to ideas to cap tax breaks on homeownership.

Thomas said he wouldn't be bound by the same restrictions as the panel in exploring ways to overhaul the tax code. He said he would consider more radical alternatives, such as a single- rate flat tax, a national sales tax or a European-style Value Added Tax.

The panel rejected all three of those concepts. . . .


Republicans are politically weak and like their tax cuts clean, not muddied by revenue raisers as the panel's proposal would provide. But, they don't have the money for revenue reducing tax cuts and owe too many industries hurt by the plan (like insurance companies and banks) too much to enact the plan. The Presidential Advisory Committee on Tax Reform's two proposals are dead on arrival, dying far sooner than the President's Social Security reform proposal did.

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