Bush CEA recommends against national sales tax or "flat" income tax rate

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http://www.nytimes.com/reuters/politics/politics-bush-taxes.html

Bush Aides Play Down Need for Drastic Tax Overhaul
By REUTERS

Filed at 3:21 p.m. ET

WASHINGTON (Reuters) - An overhaul of the U.S. tax code promised by President Bush could be accomplished without drastic changes such as a switch to a national sales tax or "flat" income tax rate, the White House said in a report (The annual "Economic Report of the President") on Thursday.

While criticizing the U.S. tax system as costly and layered with complexities, the White House Council of Economic Advisers report said approaches that would involve completely scrapping that system have a number of drawbacks.<snip>

Analyzing some of the alternatives, the report said a consumption tax such as a national sales tax would involve a transition that could be costly.

"Businesses and individuals would have to learn how to comply with and best arrange their affairs under the new system," it said.

It also said that a "flat" tax, which would impose a single rate of taxation for income and eliminate the existing system of graduated brackets, would eliminate popular deductions such as the ones for home mortgages and charitable contributions.

It would also be hard to structure the flat tax in such a way to ensure that low-income Americans face less of a burden than high-income Americans in proportion to what they earn, the report said.<snip>