WASHINGTON – President Bush on Friday named a nine-member panel to prepare options for overhauling the U.S. tax code, a process that could rival Social Security restructuring as the dominant domestic policy issue of Bush’s second term.
Bush appointed former U.S. Sens. Connie Mack, R-Fla., and John Breaux, D-La., to lead the commission. He gave the panel seven months to present its proposals to Treasury Secretary John Snow, who will distill the findings into a final set of recommendations by year’s end.
Administration officials said the panel would weigh the merits of many restructuring proposals, from modest revisions to the existing income tax system to more radical alternatives, such as flat taxes, sales taxes and value-added taxes.
In an executive order creating the commission, Bush said the panel should offer plans to “simplify” the tax code in a way that is fair, does not raise or lower the overall tax burden and which better promotes “long-run economic growth and job creation.” “I believe this is an essential task for our country,” Bush said after an Oval Office meeting with Mack and Breaux. He added: “I am firm in my desire to get something done.”
Some conservatives see Bush’s overture as a potential opportunity to replace the increasingly complex income tax system with something like a national sales tax. They argue that by taxing consumption, a national sales tax would encourage savings and capital formation, driving economic growth. Critics say a national sales tax would hit low-income people harder than the wealthy.
Some tax specialists are convinced the president has more incremental changes in mind for the tax code, such as creating new incentives for savings and investment within the current system.
Bush has placed tax code changes at the top of his second-term domestic policy agenda, along with Social Security restructuring, but it remains unclear what kind of tax overhaul he has in mind. Members of the panel said they anticipate recommending several restructuring options instead of one consensus proposal, leaving it to the president and his inner circle to decide on a final plan to present to Congress.
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