"Where's The Beef" Tax Refrom Panel falls short

Merrill Bender

The President's Tax Reform Panel submitted its final report and recommendations for tax reform to Treasury Secretary John Snow earlier this month.

Unfortunately, the report only tinkers with the current code instead of providing the substantial or bold reform that was promised when the President's panel was formed.

In President Bush's 2005 State of the Union he said, "Year after year, Americans are burdened by an archaic, incoherent federal tax code. I have appointed a bipartisan panel to examine the tax code from top to bottom. And when their recommendations are delivered, you and I will work together to give this nation a tax code that is pro-growth, easy to understand, and fair to all."

The Panel's proposal is far from being easy to understand and is hardly fair to all by eliminating the deductions for local property taxes for Home owners. Many groups have given the panel a Grade of"F" for their report and others defend them and point out they were given strict guidelines that did not allow them to use "dynamic scoring" but had to maintain revenue neutrality.

The Panel offers some minor tinkering for simplification by going from 6 tax brackets to 4. But leaves the vast majority of complicated tax rules that will still require most Americans to hire a professional to prepare their tax return.

An Old Commercial use to ask "Where's the Beef".
I Ask "Where's the Major Reform?"
"Where's the easy to understand?"
Where is the Bold Tax Reform that is Fair To All that the President called for in his State of the Union address?

The Panel has rearranged the deck chairs on a very ugly an outdated ship; the USS Income Tax Code. It is a ship that is heading our economy into an iceberg full of Lobbyists and special interest that will continue to plague the tax code and force Average American Families to pay more.

They had an excellent opportunity to give 3 or 4 options to the President and they failed miserably. It is time to bury the old code and bring in the new.

Visit the following link for a honest look at where to start. RIP IRS 1913-2005 http://tinyurl.com/c23o8
Ony by scrapping the code and starting over can we release the hold of Special Interests and "K" Street Lobbyists from the pockets of our Legislators.

The Panel gave little consideration to a true Flat Income Tax as proposed by a Jack Kemp or a Steve Forbes nor did they lay out a true consumption or Sales tax option (Fair Tax) as supported by the NTU (National Taxpayers Union) or by AFFT ( Americans for Fair Taxation).

Instead they are supporting a plan that will hurt many American Home owners by eliminating State and local property tax deductions, capping mortgage interest deductions and eliminating Home Equity loan interest deductions.

On CNBC's Squawk box, Senator John Breaux argued that Mortgage interest and property tax deductions benefit high tax blue states like California and New York and that other States that have little to no property taxes should not subsidize those States.

As the host tried to point out, it is not a subsidy issue at all it is a matter of fairness and not taxing that income twice. By eliminating this deductions, Home Owners will pay tax twice on the income earned. It is an issue of tax fairness.

Fighting against Double taxation in the code has been a strong Republican argument for tax reform changes for years. Republicans should see this as a very bad reform package and push for a much better and bolder reform plan.

The Fair Tax is the Better Choice by Far.

Blue State Democrats like Senator Clinton and Senator Schumer of New York should certainly join the chorus as well.

As I listened to the Tax Panel discussions on C-SPAN, they tried to discuss the very popular "Fair Tax", However, they misrepresented all the features of this very Progressive and well researched plan that has been around for almost 10 years.

They used incorrect or worst case scenario numbers in their presentations and discussions which did not give a Fair hearing to a National Retail Sales Tax with the added features found in the Fair Tax (HR25). At the same time they used better case scenarios to support their own twisting of the Tax code.

Talk Show Host Neil Boortz, has written a very informative and humorous book( NY times Best Seller) about this tax plan in conjunction with Congressman John Linder who is the key sponsor of the Legislative package HR25. The Rebuttal section of www.fairtax.org also answers the critics and with solid data rebuts their assertions on tax evaision or the requirement for a 40% tax rate.

The Fair Sales Tax plan is already in full legislative form waiting in the halls of Congress for more Co-sponsors(currently 47 Sponsors).

The Fair Tax is ready to supercharge our economy, allow workers to take home 100% of their paychecks, truly untax the poor and save American jobs.

There are currently 47 Co-sponsors of the Bill and many Congressman were waiting to see what the President's panel came up with before they decided on what to support. Those Congressman can see that the Panel's plan will not fly with Home Owners and they are now free to support a better plan- The Fair Tax - Sales Tax plan HR25.

The Fair Tax - HR 25/S25 eliminates personal and business income taxes, eliminates the Payroll tax, eliminates the Alternative minimum tax - AMT, eliminates estate tax and Capital Gains taxes; Replacing them all with a one time Retail Sales tax on NEW purchases of Goods and Services. Let Wal-Mart worry about collecting the taxes and free up the American worker and the Middle class from the burden of the IRS Tax Code.

The Fair Tax Plan actually maximizes the Mortgage deduction in a very different way. There is no income tax to get a refund from; you keep 100% of your pay. That is an equivalent of giving a current Home Owner with a mortgage a 100% deduction of interest and a 100% deduction of principal payments on his current mortgage. That is a far better Home Ownership plan that all of Congress can support.

I wrote about it back in August. http://fairtaxreform.blogspot.com/2005/08/mortgage-deduction-maximized-under.html

The Fair Tax Plan also boldly and logically meets the true criteria set down by the President. The Fair Tax is easy to understand and is fair to all. See the top ten economic benefits of the Fair Tax at: http://fairtaxreform.blogspot.com/2005/02/top-ten-economic-benefits-of-fair-tax.html

With the fear of losing the local property tax deductions and some mortgage deductions, perhaps Democrats will wake up and support Fair Tax Reform and sign on to HR 25/ S25. If not the loss of local property tax deductions will be a killer in States like New York and California.

Those that Know the Facts, Love the Fair Tax.