WE ALL KNOW that the current tax system is badly in need of change, but the tax bill passed by the Senate last week does not adequately respond either to our real economic needs or to our desire for tax justice.

It's true that some provisions move in the right direction: We have finally imposed a tough minimum tax on wealthy individuals and profitable corporations, closed tax loopholes and removed the working poor from the income-tax rolls.

But, the bill has major problems and deficiencies serious enough to cause me to vote against it:

First, this bill hurts a significant number of middle-income Americans. The bill's lower tax rates have gotten much attention, but we also have to realize that eliminating many middle-income deductions will raise taxable income. Tax rates would go down for most, but tax bills would go up for many. According to the best available data, one out of four taxpayers earning between $20,000 and $30,000 a year could receive tax increases averaging $340 under the Senate bill and one out of three taxpayers making between $30,000 and $40,000 a year could get tax increases averaging $525.

While some 14 million middle income taxpayers could see their taxes increase, more than half of the taxpayers making over $200,000 could get a tax cut averaging more than $50,000 a year.

Second, tax reform is important, but deficit reduction is critical. And this tax bill makes realistic and reasonable deficit reduction more difficult.

The tax bill is designed to raise no additional revenue; on the other hand, the just-passed budget resolution assumes that we will raise $20 billion in additional revenues. If we can't get the money from a progressive tax code, what do we do? We might increase regressive excise taxes that could wipe out the tax relief we just gave to the working poor. Or maybe we will combine some blue smoke and mirrors with ugly spending cuts to try to cover the gap.

The point is this: The tax bill and the budget should operate on the same assumptions -- but they don't.

Third, in many important ways, this bill simply is not consistent with the principle of fairness or compatible with the goal of promoting the national rather than special interests:

This bill has significant and disturbing retroactive features. It's wrong, for example, to tell millions of people who have taken out consumer loans on the assumption that the interest would be fully deductible that such is no longer the case. It violates the spirit of due process to tell people who already have made real-estate investments based on tax policies designed to encourage those investments that the rules have changed in the middle of the game. We should do away with abuses; but in this bill we have abused the concept of fair play.

Take another disturbing aspect of retroactivity: Buried in the Senate Finance Committee bill were almost 200 "transition rules" -- tax breaks softening the blow of the new law on specific companies that began projects under provisions of the current tax code. Some of these tax breaks are justified. What concerns me is that while millions of individuals and businesses are subject to retroactive changes in the rules, only a few were able to get a special exception to the new rules in the law. This selective fairness is inherently unfair.

Another selective benefit of this bill involves the interest deduction on education loans, car loans and other consumer loans. In theory, the bill eliminates that deduction -- but in practice you can keep it if you own a house and have adequate equity in it. It is fundamentally unfair to have three families with the same income paying different taxes because one family has enough equity in a house to sign a second or third or fourth mortgage to back what really really amounts to a consumer loan, (thereby making the interest deductible) while others who rent or just don't have enough equity in their home can't use this loophole to deduct consumer interest.

Finally, consider the broad elimination or reduction of certain deductions that encourage socially desirable actions or provide real help to those in need -- all, presumably, in the name of eliminating special interest legislation and promoting fairness in the tax code. Are the 22 million people who use the medical-expense deduction the privileged and the powerful, or are they the average and the ill? Are the 61 million taxpayers who no longer would be able to deduct their charitable contributions well-tailored lobbyists or are they well-intentioned citizens? Are the 28 million people who contribute to IRAs an invidious special interest or just citizens with a legitimate interest in how they will live when they retire?

We have spent years complaining about the obvious problems in the present tax code. We ought to make sure that a new tax code rights those wrongs without creating a lot of new ones.

I believe we can do that. But I don't believe we have yet.

We needed a broom and got a bulldozer. We got those who escape paying taxes -- but we also hit many middle income Americans who already pay more than their fair share.

This bill gives us some reform; but it also gives us some new tax unfairness and it actually makes deficit reduction much more difficult. When something is broke, you should fix it -- not just throw some new pieces together and hope they fit. In this case, the way to fix our problem is to fit tax reform together with deficit reduction to use the revenue from loophole-closing and from an effective minimum tax to reduce the deficit, not to fund uneven tax cuts. Then we would have a fix that is both quick and long-lasting.

Carl Levin, Democrat of Michigan, was one of three senators to vote against the Senate tax bill last week.