The House should rescue and pass the tax bill to force the Senate to deal with the subject next year. No one can endorse the bill unreservedly. It is too big for that, and has gone through too many hands. But on balance it would make ours a fairer system.
1.The measure's most powerful provisions would move the tax threshholds back above the poverty line, so the poor would no longer owe income taxes. They generally didn't in the 1970s, but have begun to since. About 6 million families and individuals with very little income would be taken off the rolls by this step. Many are working poor who pay rising Social Security taxes and were perhaps the biggest losers in the first-term Reagan spending cuts, which tended to lower eligibility lids for social programs. The second-term tax bill is an important offset to the first-term fairness issue.
2.These tax cuts for the poor were proposed by the president. He also proposed large tax cuts for the very rich. The Ways and Means Committee tapered these down. Its bill would reaffirm the traditional progressivity of the income tax, the principle that rates should rise with income. The committee also strengthened the minimum taxes for both individuals and corporations. Some tax reformers see this as a weakness, a confession that the committee could not accomplish all it should have in wiping preferences from the code. But not all preferences are bad; the logic of a minimum tax is simply that there must be a limit to anyone's use of these tax-reducing devices in any one year. The new provisions would achieve that. You have here the most basic fairness issue in taxation: those with income ought to pay.
3.sThere are certain industries -- defense, banking, real estate -- whose effective tax rates over the years have been egregiously low. They have become symbols for discontent with the tax code. The bill would deal decisively with several of these. Defense contractors would lose the so-called completed contract provision by which many have all but avoided taxes in the past. Banks would lose deductions for excess bad debt reserves. Depreciation periods would be stretched out on real estate. There are other examples, good things long overdue.
4.Many in and out of Congress believe that next year there will be a tax increase -- that while the president still will not hear of it, there must be. This bill would be an imposing vehicle. It is "revenue-neutral" now; what it raises by narrowing preferences it returns by cutting rates. It would not be hard to adjust these combinations to increase revenues, and the increase would be the fairer for the reforms that would accompany it. It was the president's idea; it is the Democrats' bill. Both parties should vote aye today.