Magazine article The American Prospect

This Is Simplification?

Magazine article The American Prospect

This Is Simplification?

Article excerpt

THERE ARE MANY THINGS TO CRITICIZE ABOUT THE recent report from President Bush's Advisory Panel on Federal Tax Reform. Personally, I'm appalled at the report's call for adding $7 trillion more to the deficit over the next two decades--a catastrophe the panel weirdly styles as "revenue neutral." If that's not bad enough, the panel's zeal to shift the tax burden even further away from investors and on to wage earners seems wrongheaded in the extreme to me. But while opinions may vary on these issues, one thing's for sure: This program is not tax simplification.

Bush's panel boldly insists that its ideas would make tax filing easier--an assertion that gullible stenographers in the news media have dutifully repeated. To prove that its plan would be simpler, the panel has produced a new sample tax form, modestly titled the "1040-Simple," that condenses the basic tax form down to a mere one page, rather than the current two. Indeed, the panel crows, the new form can be squeezed onto a large two-sided postcard if the typeface is small enough.

Don't start cheering yet. It's a hoax. For example, near the top of the current form 1040, taxpayers must state their filing status (e.g., married, single, etc.) and list their dependents. The panel's 1040-Simple moves these essential items to a separate form. Whereas various types of business income (self-employment, farm, etc.) currently get their own entries, the new form provides only one line for the sum of all of them. A mysterious line called "other income" encompasses a number of items, from alimony to unemployment, that are now reported individually. Of course, they'd still need to be detailed elsewhere. Likewise, various adjustments to income are moved off the 1040 to supporting forms.

If such a silly rearrangement of the deck chairs is all it takes to make taxes simpler, the panel obviously lacked ambition. Why not cut the current form down to a single line? How about, "Write down your tax or refund due. See relevant schedules A to Z to calculate"?

Bush's panel also makes a big deal about how its plan to eliminate or restructure itemized deductions would curb complexity. Deductions for things like extraordinary medical expenses, union dues, casualty losses (sorry, Louisiana), and so forth would be out the window. Also gone would be write-offs for state and local income and property taxes--although these are just about the easiest deductions to compute, not to mention the most defensible. …

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