Tax Reform slides, and slides:
June 17, 2005
Planning for a Tax Overhaul Will Have to Wait, Bush Says
By EDMUND L. ANDREWS
nytimes.com
WASHINGTON, June 16 - President Bush will delay his plans to overhaul the tax code, in part because of his mounting difficulties on Social Security and other top initiatives.
In an announcement on Thursday, Mr. Bush said he would wait an extra two months, until the end of September, for recommendations from an advisory panel on ways to make the tax code simpler and fairer.
The decision means that Mr. Bush is unlikely to propose a big tax measure until next year, mainly because administration officials have been bogged down far more than they expected on efforts to overhaul Social Security.
"From the White House perspective, the president and the Congress have a lot on their plate right now," said Trent Duffy, a White House spokesman.
Transforming the tax code was one of Mr. Bush's top two economic initiatives upon winning re-election, and White House officials had hoped to embark on a sweeping tax effort as soon as they achieved a transformation of Social Security.
But despite months of effort to drum up enthusiasm, public support for Mr. Bush's Social Security plan has waned and opposition has hardened.
With Congress rapidly approaching the long summer recess, Republican lawmakers have become openly pessimistic about passing any kind of Social Security bill this year.
Mr. Bush is also mired in his effort to have Congress ratify the Central American Free Trade Agreement, an accord that the administration views as a template for bigger trade deals involving all of Latin America and other regions of the world.
Under Mr. Bush's orders, the bipartisan advisory panel on the tax code was supposed to make recommendations by July 31 for a comprehensive overhaul. The Treasury Department was then to come up with its own recommendations, with a goal of proposing a measure to Congress before the end of this year, now highly unlikely given the new timetable.
In a statement on Thursday, the Democratic and Republican co-chairmen of the tax panel said they could have met the original deadline but were content to extend their effort by two months.
"We were on track to issue our report by July 31st," said the chairmen, former Senator John B. Breaux, Democrat of Louisiana, and former Senator Connie Mack, Republican of Florida. "Nevertheless, we are comfortable taking additional time to complete our work."
The panel, made up of economists and academic experts, has held hearings in Washington and around the country and received comments from thousands of people.
Though Mr. Bush has never specified the kind of changes he wants, administration officials have been very eager to reduce taxes on savings and investment and to focus on taxing consumption.
The tax reform panel has been looking at a wide variety of proposals, among them ideas for a flat tax for people at all income levels and for some form of national sales tax.
Kevin Hassett, director of economic studies at the American Enterprise Institute, said the delay on tax policy did not mean Mr. Bush had abandoned that effort or an overhaul of Social Security.
"If they were totally giving up on Social Security, they would just move on to tax reform," Mr. Hassett said. Some House Republicans have wanted to do that all along, or to combine Social Security with a tax overhaul.
Mr. Bush may have more political leverage on tax policy than on Social Security. Democrats are increasingly alarmed about the expansion of the alternative minimum tax, a parallel tax that was originally aimed at high-income taxpayers but is now snaring millions of middle-class families because it is not indexed for inflation.
Because the alternative minimum tax prevents filers from deducting state and local income taxes, it has a particularly big effect on Democratic-leaning states, from New York to California, that have high taxes.
* Copyright 2005 The New York Times Company |
