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Tax reform made hard
An editorial / By Dale McFeatters
Scripps Howard News Service


October 19, 2005
Wednesday AM

President Bush's tax commission has given a preview of the final options for reform it will formally recommend Nov. 1 and for the most part very commendable, commonsensical proposals they are.

They also, unless a blinding bolt of enlightenment from on high strikes Congress, don't have a prayer of passage.

The recommendations generally go in the right direction of fairer, flatter and simpler.

Income tax brackets would shrink from six to four with the great majority of taxpayers, 75 percent, in the lowest 15 percent bracket. It solves the nasty dilemma of the Alternative Minimum Tax by killing it. The welter of tax-sheltered savings accounts would be reduced to just three. Low-income taxpayers could let the IRS calculate the Earned Income Tax Credit for them.

So far so good. But now it gets tricky. The roster of personal and family exemptions would be replaced by a single tax credit. There would be caps on deductions for employer-provided health insurance and it would only be tax-free to the recipients up to a certain amount. Other fringe benefits would be taxes as income.

And here's where it gets trickier yet. The deductions for state and local income, sales and property taxes would be scrapped. Home mortgage and home equity deductions would be replaced with a tax credit.

This will bring the special interests screaming out of the woods. On behalf of high tax state like his own, New York Sen. Charles Schumer raged at ending the deduction for state and local taxes: "We will do everything in our power to defeat this pernicious proposal."

And there's the problem. The recommendations of tax reform commissions - and the shelves are packed with their sensible proposals - tend to come as a unified whole. Like the proverbial sweater, start pulling out individual threads and soon the whole thing comes unraveled.

The dirty secret of the tax code is Congress writes it and the IRS only administers it - and takes the heat for the lawmakers' handiwork. Congress placed every deduction, credit, account, shelter, and loophole there in response to the demands of favored and powerful constituencies.

And we expect Congress to yank these breaks away from them just because it makes sense? Good luck.


Contact Dale McFeatters at McFeattersD(at)
Distributed by Scripps Howard News Service,

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