THE PRESIDENT'S TAX REFORM AGENDA
After winning a second term last year, President Bush announced that the focus of his domestic agenda would be "reforming" both Social Security and the federal tax code. With his Social Security plan stalled due to strong public opposition, the focus now turns to tax reform. This might be a better bet for a president looking to shift the focus from the mess in Iraq.
Last year, the President convened a panel of tax experts to give him recommendations on how to simplify the Federal tax code while also making it more equitable and efficient. The President's only demand; neither raise nor lower the amount of revenue collected by the Treasury.
On Wednesday, the panel made its first recommendation - eliminate the Alternative Minimum Tax (AMT). The AMT has become a regressive tax. It was originally implemented by Congress in the late 60's as a measure to prevent millionaires from avoiding taxes. In recent years, the AMT has become cumbersome middle class tax squeeze, with more and more people affected each tax season. At present, the Treasury Department says that 4 million Americans fall under the burden of the AMT, but next year the number will jump to 21 million, and then to 51 million in just ten years. That will not be politically popular in an election year.
It's possible, if not likely, that the AMT will remain in effect for the wealthiest Americans. But if the AMT is repealed for middle class tax payers, the Treasury would need to make up for the $1.2 trillion loss that would be realized over the next decade.
The panel is divided into four working groups that are sorting through numerous tax problems and various proposals for change. The groups are working on ways of simplifying tax laws, and replacing the tax system in whole or in part. Former IRS Commissioner Charles Rossotti said one group is addressing changes that might help the most taxpayers, like streamlining family deductions and credits and savings incentives. That group is also investigating the numerous thresholds at which taxpayers of differing income levels qualify for various tax breaks.
The commission will make its final recommendations this fall, and for the president it probably can't come soon enough. Simplifying the tax code and making it more fair is an everyman proposal that is likely to garner widespread support. Try and find someone who favors the current system, or who thinks the system is fair. Everyone thinks that someone else isn't paying enough, or paying their "fair share." The President could use a populist reform agenda to bolster his sagging poll numbers, and to give Republicans something to campaign on next year.
And really, who wants to oppose the notion of simplifying the tax code and making it more requitable to everyone? Not too many Democrats, I suspect.
Copyright © 2005 The Independent Report. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without the author's consent.
After winning a second term last year, President Bush announced that the focus of his domestic agenda would be "reforming" both Social Security and the federal tax code. With his Social Security plan stalled due to strong public opposition, the focus now turns to tax reform. This might be a better bet for a president looking to shift the focus from the mess in Iraq.
Last year, the President convened a panel of tax experts to give him recommendations on how to simplify the Federal tax code while also making it more equitable and efficient. The President's only demand; neither raise nor lower the amount of revenue collected by the Treasury.
On Wednesday, the panel made its first recommendation - eliminate the Alternative Minimum Tax (AMT). The AMT has become a regressive tax. It was originally implemented by Congress in the late 60's as a measure to prevent millionaires from avoiding taxes. In recent years, the AMT has become cumbersome middle class tax squeeze, with more and more people affected each tax season. At present, the Treasury Department says that 4 million Americans fall under the burden of the AMT, but next year the number will jump to 21 million, and then to 51 million in just ten years. That will not be politically popular in an election year.
It's possible, if not likely, that the AMT will remain in effect for the wealthiest Americans. But if the AMT is repealed for middle class tax payers, the Treasury would need to make up for the $1.2 trillion loss that would be realized over the next decade.
The panel is divided into four working groups that are sorting through numerous tax problems and various proposals for change. The groups are working on ways of simplifying tax laws, and replacing the tax system in whole or in part. Former IRS Commissioner Charles Rossotti said one group is addressing changes that might help the most taxpayers, like streamlining family deductions and credits and savings incentives. That group is also investigating the numerous thresholds at which taxpayers of differing income levels qualify for various tax breaks.
The commission will make its final recommendations this fall, and for the president it probably can't come soon enough. Simplifying the tax code and making it more fair is an everyman proposal that is likely to garner widespread support. Try and find someone who favors the current system, or who thinks the system is fair. Everyone thinks that someone else isn't paying enough, or paying their "fair share." The President could use a populist reform agenda to bolster his sagging poll numbers, and to give Republicans something to campaign on next year.
And really, who wants to oppose the notion of simplifying the tax code and making it more requitable to everyone? Not too many Democrats, I suspect.
Copyright © 2005 The Independent Report. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without the author's consent.
posted by Sean M. Kennedy | 9:23 PM
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