Remember back in 2005 when Dubya created a blue-ribbon panel to come up with ideas on how to overhaul the Internal Revenue Code?
Remember how that group, the President’s Advisory Panel on Federal Tax Reform, did indeed offer some creative proposals, such as doing away with the mortgage interest deduction?
Remember how quickly the panel's work got pushed to the very back burner?
Now Obama says he wants to give the tax panel concept a go.
Timing is everything: While it might seem that the new president is overloading his policy plate a bit, he is facing a deadline created by his predecessor. At the end of 2010, all of the Bush administration tax cuts that were enacted in 2001 and 2003 will expire.
If legislative action isn't taken to deal with the sunsetting laws, income taxes will rise sharply for most Americans. Obama's own Making Work Pay tax credit, part of the stimulus measure championed by the new president and signed into law in mid-February, also expires at the end of 2010.
Peter Orszag, director of the Office of Management and Budget, announced the creation of the task force. The group will be formed from members of the President's Economic Recovery Advisory Board, which is led by former Federal Reserve Board Chair Paul Volcker, and will report to the larger board, which will in turn submit possible tax reform options to the President by Dec. 4.
Among those recommended by Obama for seats on the tax task force are Laura Tyson, Roger Ferguson, William Donaldson and Martin Feldstein. Orszag did not offer a specific time line for the final decision on membership, which will be made by Volcker.
Areas to revamp: One of the task force's objectives will be tax code simplification. It also is expected to look at closing tax loopholes, combating tax evasion and reducing what many see as unfair corporate tax breaks.
The task force also will face some limits. Orszag told reporters that reform options cannot include tax increases in 2009 or 2010. Neither can the panel recommend raising taxes on individuals making less than $250,000 per year.
But other than that, Orszag said, the task force can consider "options of any sort that it sees fit."
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TaxRascal
Well, that sounds ridiculous. I hope they can at least consider a tax that mostly affects people earning $250K+ — if they add a new tax to wines that sell for over $1000/bottle, would they have to give people earning less than $250K a tax credit for any ridiculously-expensive wine they consume?
And what about taxes whose incidence is mostly on poorer people? If a company owned by millionaires sells products consumed by poor people, and the company faces a tax hike, the poor consumers will bear the brunt.
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