A Stitch in Haste

Were you really naive enough to think that the President's Advisory Panel on Federal Tax Reform, about which I blogged previously, was actually going to recommend, um, reform?

One change discussed would lower the $1 million limit on mortgages eligible for the interest deduction to an amount closer to average housing prices, with adjustments for geographical differences. The panel also considered converting the current deductions into a credit, among other ideas.

On health insurance, the panel recommended capping the unlimited tax breaks available to businesses and workers. Current tax laws let employers take a deduction for their employees' health insurance, and employees pay no tax on the value of the insurance.
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The panel considered an idea limiting tax breaks for health insurance to the roughly $11,000 benefit provided to members of Congress and their families, but reached no consensus. The panel also could not agree whether to subject businesses or workers to the limitation.

To review, a panel of so-called experts each bring their own subjective list of "inadequacies" in tax policy (most of which boil down to whining about how the rich don't pay enough tax) and come up with -- surprise -- a list of new ceilings, limits, exclusions and rules (not to mention a new twist: geographic favoritism) for the very tax code that they were supposed to "reform." Go figure.

On the other hand, the early reports are that the panel will not recommend a value-added or consumption tax, but will recommend the abolition of the Alternative Minimum Tax. Remind me what was at the bottom of Pandora's Box?

As the tax-and-spend Republicans in the White House and Congress have made painfully clear, there is no interest, none whatsoever, in simplifying or reducing taxes (or spending, for that matter). This pathetic tax reform panel is just the latest embarrassment from a perpetually embarrassing Washington.