Bruce Bartlett on Bush's "Tax Advisory Panel"

[Bush_Eats_Beef]

My question is this: If Bush has demanded that any recommendations be "appropriately progressive," HOW THE HELL can the "National Sales Tax" STILL bet at the top of the list, SEVEN MONTHS after this panel was formed?

http://www.townhall.com/columnists/brucebartlett/bb20050112.shtml

Another problem is that President Bush has severely limited the options that the commission may consider. First, he has effectively barred it from even proposing elimination of the deductions for mortgage interest and charitable contributions. Second, the tax code must remain "appropriately progressive." Third, the recommendations must be "revenue neutral," which means they will include tax increases. And fourth, "At least one option submitted by the Advisory Panel should use the Federal income tax as the base for its recommended reforms."

This suggests several things. It means that a pure flat tax is off the table. It is unrealistic to have one while retaining both the mortgage interest and charitable contributions deductions. That would make the rate too high and also create inexorable pressure to keep other popular deductions once an exception has been made for charity and housing.

Furthermore, the demand that "at least one option" retain the income tax means that the commission can't put its full weight behind a consumption-based tax system, which most economists now support. Moreover, unless the commission makes retention of the income tax its primary recommendation, it will necessarily have to have at least two options in its report. This almost guarantees that the report is unlikely to focus national attention the way it would if it were to unanimously support just one.

Lastly, the commission will not have its own staff, but must rely on the Treasury Department for support, although the president will appoint an executive director. But the reality is that the department's career staff will end up doing most of the writing of the actual report, especially since there is currently no assistant secretary or deputy assistant secretary for tax policy at Treasury.