Tax reform news does not inspire

The news from the workings of the Bush Administration's tax advisory panel is enough to put a chill on an otherwise warm fall evening here in the heartland. So far all we are hearing is that, in exchange for dropping the excreble alternative minimum tax, other taxes are going to be going up.

And as for any fundamental positive reforms or changes, forget about it.

Oct. 11 (Bloomberg) -- President George W. Bush's tax advisory panel, rejecting a fundamental overhaul, agreed to recommend limiting tax breaks for homeowners and employer- provided health-care benefits to help pay for repealing the alternative minimum tax.

The panel, meeting in Washington today, agreed the current $1 million cap on deductible mortgage interest should be reduced, possibly to about $350,000, and that the deduction should yield no more than a 25 percent tax savings, down from a top savings now of about 35 percent.

The panel also said it would probably recommend capping tax deductions for employer-provided health-care plans. Current law allows employers to deduct the value of premiums paid on behalf of their workers without the benefit being considered taxable income to the employee. The panel discussed placing the cap at the maximum amount the federal government pays in premiums for its workers, currently about $11,000.

Admittedly most Americans won't come anywhere near the caps for deductible mortgage interest, or even the tax deductions for employer-provided health care plans. But if you believe that principles are important, then what is brewing is your typical Democrat-style "stick it to the rich and wait to see how screwed up the system is afterwards" plan.

Panel vice-chairman John Breaux, a Democrat who was formerly a U.S. Senator from Louisiana, indicates that the panel is working on the bare-treaded nostrum that all tax cuts must be offset by tax hikes. The old zero sum argument that has proven false time and again.

Breaux said such ``tough choices'' would raise ``a generous amount'' of taxes to help offset the $1.3 trillion cost of repealing the alternative minimum tax, he said. The minimum tax, imposed in 1969 to ensure that 200 wealthy families didn't escape tax with excess deductions, is now forcing millions of middle- income families to pay higher taxes because it was never indexed for inflation.

The panel -- surprise, surprise -- ruled out a national sales tax. (Sorry Boortz.)

The panel ruled out a value-added tax -- thank God -- but not without giving it some admiring glances.

The only part that sounds hopeful:

The panel agreed to a proposal by former IRS Commissioner Charles Rossotti to make it easier for lower income Americans to get a tax break for donating money to charity.

But the devil is the in the details. We sense the presence of evil.

Particularly smelly is the whiff of envy from government workers, as their lap dogs on the committee attempt to do their bidding:

Former Federal Trade Commission Chairman Tim Muris, a member of the panel, said the change would end subsidies that favor wealthier Americans. If adopted, the change would increase taxes on workers whose employers provide them health plans that are more valuable than those offered government workers. (DOT emphasis)

...

Tax preferences for health care are the largest incentives in the current tax code, and American workers will save $1.9 trillion over the next decade by avoiding taxes on the value of their employer-provided premiums.

And what, pray tell, is wrong with incenting businesses to provide health care coverage to their workers? These rules were put into place so that there would not be a need of draconian federal health care programs, ala Hillary-Care. Yet it seems that government workers do not like it when private employees approach or exceed the level of fine benefits that government provides.

Why stop with the cadillac plans. Let's strip away all the incentives. Corporate America, of course, will drop health care coverage like a bastard step-child. No longer covered employees will cry foul and demand that government DO SOMETHING! Voila! In a couple of years we get a Democratic president and some version of Hillary-Care.

(Careful. Take the blood pressure medication and get calm. Think good thoughts. After all, these are only recommendations from the President's Select Commission on Tax Policy. They are not the law of the land, yet. Surely goodness and mercy and Congress shall follow us and reject the worst parts of this out of hand ... Good Lord! What are we saying? This Congress?)

Let's try it again out loud this time. These are only recommendations and there is still yet time for sanity to prevail.

Is that Christopher Cross we hear, sailing, sailing away?