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TAX REFORM? OH, YEAH, WE'RE FOR IT. JUST AS LONG AS WE CAN KEEP OUR OLD TAX BREAKS AND ADD SOME NEW ONES

February 21, 2006

The right-ish Tax Policy Blog finds the Bush Administration commitment to tax reform lacking in seriousness:

While the White House claims to be dedicated to reforming the complicated federal income tax code, how viable can this commitment be when you simultaneously have policy positions that are headed in the opposite direction of reform? These include:

- This statement saying that reforming of the home mortgage interest deduction is off the table.

- The President’s proposal to use deductions and credits in the tax code as part of his health care reform initiative.

- The President’s support of using the tax code as part of his energy reform proposals, including credits for hybrid cars and tax credits for certain corporate activities

In addition to these factors limiting the likelihood of any tax reform being implemented, paradoxically, the two sets of tax cuts that the President has pushed through have also contributed to the difficulty in obtaining broad support for tax reform. Because the tax cuts significantly cut taxes across-the-board for all income taxpayers, any reform package now that is revenue-neutral is likely going to have to raise taxes for some while lowering taxes for others.

It's well worth reading in full. It is puzzling, though, how the Tax Policy Blog, which has a clear understanding of the evil targeted tax breaks cause to the federal tax system, opposes the Cuno decision, which would eliminate many such breaks on the state level.

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