The Devil Is in the Details of Tax-Reform Plans

Article excerpt

Although polls continue to show that fundamental tax reform is among the most popular issues with voters, there is little likelihood 1998 will see any progress in this direction. Bill Clinton has said he will oppose any movement toward a flat tax or consumption tax, while congressional Republicans appear incapable of agreeing on what tax-reform plan to support. Indeed, almost weekly it seems as if some congressman or senator comes forth with yet another tax-overhaul plan that splits reformers into even more competing camps.

The best-known tax-reform plan is the flat tax, sponsored by House Majority Leader Dick Armey of Texas and Republican Sen. Richard Shelby of Alabama. However, the flat tax has lost support in Congress because it would not completely do away with the IRS. Bolstered by recent hearings on IRS abuses, supporters of abolishing the IRS have turned instead to the national retail-sales tax sponsored by GOP Reps. Dan Schaefer of Colorado and Billy Tauzin of Louisiana.

The flat tax also has suffered at the hands of its own supporters, some of whom have given up hope of enacting it as a replacement for the current tax system. They now favor the flat tax only as an addition to the already bloated U.S. tax code, as an alternative tax system. Also, some former flat-tax supporters have decided its emphasis on tax neutrality is wrong. They want the tax system to tilt actively in favor of families, even if it means worsening the tax treatment of businesses and capital. Fred Barnes in the Weekly Standard reports Family Research Council President Gary Bauer will put forward such a plan in the near future.

Given the seeming impossibility of developing a consensus on ultimate tax reform at this point, perhaps it is time for tax reformers to lower their sights and concentrate on less comprehensive objectives. It may be possible that those favoring competing tax plans can agree on some interim steps that move in the same direction. …

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