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Tax Experts Predict No Big Shifts

By Jonathan Weisman
Washington Post Staff Writer
Saturday, January 8, 2005; Page E01

Tax experts said yesterday they expected President Bush's new tax panel to recommend incremental change to the tax code, not a fundamental replacement.

The president reiterated his intent to push wholesale changes to the tax code that would make it simpler and more conducive to economic growth, but outside experts say that is now unlikely.


President Bush meets with members of his tax panel on Friday. The panel will be chaired by former senators Connie Mack (R-Fla.), left, and John Breaux (D-La.). (Ron Edmonds -- AP)


Friday's Question:
It was not until the early 20th century that the Senate enacted rules allowing members to end filibusters and unlimited debate. How many votes were required to invoke cloture when the Senate first adopted the rule in 1917?
51
60
64
67


The composition of the panel, with only one of its nine members being a tax policy expert, coupled with time limits and the requirement that any proposal be revenue-neutral, indicate that an incremental approach will be taken, they said.

"Maybe they'll end up talking about a number of alternatives available, but I find it hard to believe at the end of this process, they're going scrap the income tax," said Joel B. Slemrod, a tax economist at the University of Michigan.

The executive order creating the panel dictated that any recommendations raise as much revenue as the current tax system, reduce the cost and burden of tax compliance, maintain "appropriate" progressiveness in the tax code, include tax benefits for homeownership and charitable giving, and promote savings, investment and economic growth.

Perhaps most importantly, the panel was given a relatively short deadline of July 31. In contrast, the Social Security Commission that Bush created in 2001 took nearly a year to craft three separate overhaul options for the Social Security system. President Ronald Reagan's Treasury Department took all of 1984 to complete the first of two tax proposals that spurred the mammoth tax simplification law of 1986.

"That's the complete, utter insanity of this whole exercise," said Bruce Bartlett, a conservative economist with the National Center for Policy Analysis. "Either they will come up with something completely superficial in that timeframe, or they won't meet the deadline."

The panel will be chaired by former senators Connie Mack (R-Fla.) and John Breaux (D-La.), two widely popular political hands who would be helpful pushing any proposals.

Also on the panel is James Poterba, an economist at the Massachusetts Institute of Technology hailed as one of the sharpest tax policy experts in the United States.

"Poterba's assignment would be a very encouraging sign, but the rest of the panel seems to be representing views other than the academic study of tax reform," said William G. Gale, a tax policy expert at the Brookings Institution.


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