Asked, when he was near death, to name things he regretted not doing, Andrew Jackson said: "I didn't shoot Henry Clay, and I didn't hang John C. Calhoun." President Bush, who seems determined to leave office with nothing undone -- except, maybe, horsewhipping Harry Reid -- vows to transform not only Social Security but the hydra-headed tax code.
He chose wisely when he asked former senator Connie Mack, a Florida Republican, to chair the President's Advisory Panel on Federal Tax Reform, which will make recommendations by July 31. While in the Senate, Mack served on the Finance and Joint Economic committees -- and he has lived with Florida's baroque sales tax.
The executive order establishing the panel lists three objectives for tax reform. The third is to promote economic growth. The second is to achieve fairness. The objective listed first, however, is to simplify the code to reduce compliance costs -- including wear and tear on taxpayers' patience. Woodrow Wilson, with his obnoxious penchant for drenching everything with moralism, said paying taxes is a "glorious privilege." Perhaps. But simplicity might make the privilege even more glorious and also might, Mack thinks, get the public interested in reform.
The absence of public clamor for tax reform is partly explained by the fact that federal tax revenue as a percentage of gross domestic product is at the lowest level -- 16.2 percent -- since 1959. Perhaps the promise of simplicity, a code "easy to understand," as the president said Wednesday in his State of the Union address, can stir the interest of taxpayers. Campaign finance laws are now such a mare's-nest of ill-defined or undefined terms that no candidate can be confident that he or she is not breaking the law. The tax code, too, is like that for many of the 87 percent of tax filers -- 114 million of them -- who do not use the short form. Furthermore, it is offensive that performing the civic duty of paying taxes is so daunting that the percentage of people relying on professional help to perform it is at an all-time high.
Mack, who served three terms in the House and two in the Senate, understands the political class's metabolic urge to use tax codes to implement social policies and dispense of favors. Consider Mack's Florida.
It is one of seven states without Satan's fingerprint -- an income tax. But it has a sales tax that raises $18.3 billion annually. That tax would raise $26.5 billion were it not for the approximately 440 exemptions that are the reason why only 57 percent of transactions are taxed. Tattooing, body piercing, tanning services and lap dances are not taxed. Neither are ostrich and racehorse feed, although dog and cat feed are taxed. Lawn mowers are taxed but lawn services are not. Pool services are not but chemicals to clean pools are. Charter fishing boat services are not, fishing rods are.
In the federal tax code, as in Florida's, almost every wrinkle is there because a muscular interest group arranged to have it put there. Other wrinkles, just by existing, have summoned into existence interest groups that have learned how to benefit from them and now will die in the last ditch defending them. Which is why radical reform of the code involves picking one or more fights with almost everyone.
But that is one reason why the fights are worth picking. Tax simplification would be political reform, reducing the influence of the Washington-based lawyer-lobbyist complex that exists to wrinkle the code. Unfortunately, even rhetorical simplifiers are operational complicators. At last summer's Republican convention, Bush described the tax code as "a complicated mess -- filled with special-interest loopholes" and vowed to "simplify" it. Well.
The Weekly Standard's Andrew Ferguson notes that Bush's nomination acceptance speech also included promises to make America "less dependent on foreign sources of energy," and to provide "opportunity zones" to attract businesses to poor communities. Bush also promised to "give workers the security of insurance against major illness," to encourage the construction of 7 million "affordable homes" in 10 years and to make it easier for everyone to go to college. Sure as God made little green apples, these promises would, as Ferguson says, involve adorning the tax code with more exemptions, credits and deferrals.
In the great -- or so it then seemed -- 1986 turn toward simplification, the reduction of rates was paid for by reducing exemptions and other complexities. However, Congress, having had its fling with simplification, soon reverted to form: Since then the tax code has been amended more than 6,000 times. Such is the tide Mack and his panel must try to turn.