I've often used this space to regale you - or, depending on your interest level, bore you - with my epic 1040 struggles. I'm probably one of the few residents of the Empire State who gets holiday cards from the New York State Department of Taxation thanking me for my sizeable contributions come April. I've decided that unless they start selling $500 tax shelters, I either need a new accountant, or a new Internal Revenue Code.Which is why, with some trepidation, I awaited the recommendations put forth by the President's Advisory Panel on Federal Tax Reform - if for no other reason than a possible escape from the muscle cramps I inevitably get writing checks to Uncle Sam on or about April 15.
The bi-partisan panel - which was convened 10 months ago, conducted a dozen hearings and interviewed roughly 100 expert witnesses - submitted a pair of proposals to the Treasury Department. The first one promoted sweeping simplification of the current income tax system, while the second recommended changes for businesses that would lead to an indirect tax on consumption.
Under the panel's plan, most of those deductions, credits and exemptions familiar to many of us would be relegated to the circular file and replaced by a plan to streamline the income tax and simplify paperwork - although "streamline" and "simplify" used together when referring to the tax code may constitute something of an oxymoron.
Under one plan, individuals would pay no tax on dividends paid by companies, while excluding 75 percent of their capital gains from taxation. Under the second, all investment income would be taxed at a flat 15 percent.
As expected, the panel recommended eliminating the controversial alternative minimum tax - which, until last year, I felt reasonably distanced from, until my preparer chillingly informed me he had to "run the numbers."
I won't recap the panel's recommendations, because our editorial staff has explained them in far better and clearer terms elsewhere in this issue than I ever could, but I can't help wonder what taxpayers' reactions will be and how opinions on the proposals will differ among various economic demographics. Especially the part where the panel recommended trimming the home mortgage deduction - I imagine that part should be an easy sell to homeowners.
I got an inkling of potential potholes ahead when, on one of the major cable business networks, panel chair Connie Mack urged people to "Look at the entire package and not pick one portion of it to determine if it's good for them." That's reminds me of a car salesman who once told me, "The seats may not be that comfortable and the trunk space is limited, but the gas mileage alone makes it a great buy."
But another, and perhaps more general, question would be to question the timetable or even the impetus to implement changes anytime soon.
Over the course of a president's second term, he has roughly two-and-one-half years to get anything on his agenda accomplished. Then he morphs into the proverbial lame duck making speeches on the rubber chicken circuit.
I think we're all in fair agreement that Dubya's Social Security reform plan has officially reached room temperature. And with his administration dealing with indictments, more leaks than a New Orleans levee and a protracted war, it appears that the tax code as we know it will still have yours truly to kick around for at least a few more years.
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