Different times, different forms. Ronald Reagan holds an oversized replica of a 1984 income tax form in Bloomfield, New Jersey, June 13, 1985. Reagan was in Bloomfield to push his tax reform bill. (AP/Scott Stewart)
Washington was consumed this week with the initial skirmish over the president's nomination of Judge Samuel Alito for the Supreme Court and with the escalating debate over how we went to war in Iraq. The president also tried to focus national attention on preparing for the avian flu. But not even the president took note of the final report delivered by his commission on tax reform which was supposed to be a major part of his second term.
The commission said its reform proposals would create a slimmer and simpler tax code. A few of the changes they propose:
Eliminate the Alternative Minimum Tax.
Limit deductions on mortgage interest.
Erase deductions for state and local income and property taxes.
Cut deductions for charitable donations.
Cut taxes on capital gains and dividends.
Allow business to expense all capital purchases.
Joining the panel to discuss who would benefit, who would get hurt and whether any reform is likely, are Dan Henninger, columnist and deputy editor of THE WALL STREET JOURNAL editorial page, Steve Moore, tax specialist and a member of the editorial board and Jason Riley, a senior writer for the editorial pages.
"Is the commission's report going to be the jump start for tax reform that I think the administration once hoped it would be?"
"I believe there is a groundswell of support for just ripping up that tax code, all 45,000 pages of it, starting with something new. There is a lot of good ideas in here. Reducing capital gains taxes and dividend taxes, getting rid of the hated Alternative Minimum Tax, reducing some of the paperwork. But the public, and even the president, sort of responded to this report with a kind of a big yawn."
"One question you have to raise here is, whose interests are actually being served by tax reform? There are two interests at play, one is Washington, the other is the rest of the country. The purpose of the tax code is to raise revenue, and that revenue flows straight into thousands of spending accounts, which Congress controls. But for the average person, they think of taxes as a tax on them, their families and their income."
"Part of the problem is the rules that the commission had to work with. They were told this has to be revenue-neutral. So anywhere we put in place a tax cut, we have to pay for it with a tax increase somewhere else. This discounts reality, which is that when you reduce rates, you can stimulate the economy and lead to more tax receipts."