I’ve tried to avoid getting too upset about the Tax Advisory Panel’s preliminary recommendations. All indications are that they’re still deliberating possible reform ideas. I’m about 0.4% optimistic that their deadline isn’t until November, but it’s still something. Reducing the mortgage interest deduction and capping the healthcare exemption can’t be all they’re proposing. I know there’s the idea of extending the charitable deduction to non-itemizers and the (commendable) proposal to scrap the Alternative Minimum Tax, but there has to be more. Otherwise, and this not rhetorical, why bother? Why?
Instead, I’ll play around with this article explaining some of the recommendations. Consider:
At its last meeting, in July, the commission agreed to recommend abolishing the alternative minimum tax for individuals, a step that would cost the federal government $1.2 trillion in lost revenue over 10 years.
With a mandate to develop a proposal for changing the tax system that is revenue neutral – meaning it neither raises nor lowers total tax receipts – the commission must find enough revenue to offset the amount now generated by the alternative minimum tax.
That is mainly what led to an examination of ways to modify the deductions for mortgage interest and health insurance, two of the largest tax breaks now available to individuals. Together, the two deductions will cost the treasury about $250 billion this year.
Is this where the cynic in me reminds you that I said the panel started with a flawed mission from President Bush? The proposal must be revenue neutral. So, the panel recommends eliminating the AMT, but must find another revenue source to offset the loss of that abomination. How is that reform, exactly? As the final paragraph highlights, the recommendation does little more than shift the tax burden from one method to another (and indicates that deductions cost the government rather than benefit taxpayers). With this nonsense, the government still plays in the central planning sandbox. It just decides to use sand from a different beach. Brilliant.
Reading other responses on the Internets, I enjoyed this response to the panel’s announcement:
… And note, this is not in service of real reform of the tax code, like losing all preferences and replacing the current code with a flat tax.
No, it is merely scratching around for money to “offset” the cost of repealing the absurd alternative minimum tax. That is exactly backwards. Junk the rest of the code and keep the AMT and call it a flat tax. There is also nothing radical about proposing to use ability-to-pay standards to soak the “rich” in search of more government revenue. Wow, that’s a new one.
This is a horrible idea and needs to be taken out behind the barn and dispatched as quickly and as painlessly as possible before real and lasting damage is done. The Bush spending spree followed by the Bush tax hikes. Like night follows day, people.
I’d be remiss if I didn’t highlight this wonderful insight on why we should be thankful to the panel. Consider:
“We’ve got to make bold recommendations without regard to the politics of them,” said John Breaux, the panel’s vice chairman and a former Democratic senator from Louisiana. “The politics will be debated for a long time.”
The politics will be debated for a long time because the panel hasn’t eliminated them, or even changed them. It’s still the same scheme of preferences to soak the rich and offer handouts to the poor. Our elected officials, and the people they appoint to carry out tasks, should be able to lead. If they can’t lead, they shouldn’t be involved. Freakin’ idiots!
I do, in fact, know that I’m living in a fantasy land.