Bush Tax Advisory Panel: "Political viability of recommendations is nil"

[Bush_Eats_Beef]

Tax panel work isn’t of value
By Chuck Jaffe

http://www.qctimes.net/articles/2005/10/30/news/business/doc43644e3b23f96715251632.txt

ON Tuesday, the President’s Advisory Panel on Federal Tax Reform will issue its final recommendations for building a better tax system. The question I have for the group is simple: Why bother? President Bush assembled this bipartisan group to come up with ideas for meaningful tax reform. Formally, the final list of suggestions will come out Tuesday, but the group already has issued a preliminary report. If you missed that news, it could be because the suggestions were either ho-hum, or they were presumed dead on arrival.

The panel proposed legislation that would offset revenue Uncle Sam could lose by scrapping the alternative minimum tax. “Alt min,” which is badly named because it really is the “alternative maximum tax,” has been catching a growing number of middle-class taxpayers in recent years, putting them into what amounts to an expensive purgatory. Among the solutions the committee offered are a reduction of the mortgage interest deduction and limiting the deduction that employers get for health insurance costs. Both will be stillborn.

Moreover, even Bush might have trouble backing the idea, since he has been trying to convince the American people about the importance of the “ownership” society, and it’s hard to push for more ownership at the same time you are making it harder to get a bigger home.

The other non-starter in the proposals involves cutting back on how much an employer can contribute on a tax-deductible basis to an employee’s health coverage. The tax breaks would be capped at $11,500 for a family or $5,000 for an individual, and all other currently untaxed fringe benefits given to workers would be taxed. The business community already is balking at the idea, and no one doubts that there will be significant financial pressure to keep this portion of reform from ever becoming a reality. Another key proposal would change the deductibility of state and local taxes, a proposal that would cripple residents of high-tax states. No politician hoping for a national future is willing to forego New York, California, New Jersey and many of the other high-tax-but-big-electoral-vote states.