Bush's tax vision seen as faulty
Analysts say plans add complications
President Bush has repeatedly called for an overhaul of the nation's tax system during his reelection campaign, promising to clean up the ''complicated mess" of regulations and loopholes by leading a bipartisan effort to simplify the tax code.
''It's full of special-interest loopholes. It's a million pages long," Bush said earlier this month at a campaign event in Manchester, N.H. ''I'm going to call Republicans and Democrats together to do something about an antiquated tax code that needs to be changed."
But Bush's own policies have made the tax code more complicated than ever; taxpayers this year needed 28 minutes more on average to fill out 1040 income tax forms than they did in 2001 when Bush took office, according to the IRS. And Bush has endorsed a series of new tax cuts that would further complicate tax regulations before any simplification efforts could be attempted.
Proposals that Bush supports could significantly undermine efforts to simplify the tax code by creating new deductions and loopholes, independent budget analysts say. Those measures could make it more difficult for Bush to reach his stated goal of a tax overhaul that does not further increase the record federal deficit.
''Proposing tax simplification when you have so many tax proposals on the table seems inconsistent; there's no doubt about it," said Robert L. Bixby, executive director of the Concord Coalition, a nonpartisan group that advocates fiscal responsibility. ''This is not tax simplification. So far, it seems like tax confusion. . . . Nothing in his record or his proposals move toward simplification."
For his part, Democratic presidential candidate John F. Kerry has not offered plans to simplify the tax code, although he has not made it a major issue in his campaign, either. The Massachusetts senator has called for raising taxes on upper-income taxpayers, in large part to pay for his health-care program, and wants to close loopholes that give tax breaks to companies that shift jobs overseas. The Kerry campaign says his elimination of corporate tax loopholes would have the effect of simplifying the tax code.
Aside from brief mentions on the campaign trail and his promise to appoint a commission to study the matter, Bush has offered no details of his vision for tax reform. He has gone into far greater specificity regarding the tax breaks he wants extended to individuals and businesses as part of his plans to grow the economy.
Bush has called for establishing tax-free ''lifetime savings accounts," expanding tax credits for the purchasing of health insurance, and allowing more taxpayers to lower their tax bills through charitable contributions.
He also is poised to sign a $137 billion corporate tax-cut bill that will sprinkle a myriad of new breaks into the tax code. Those include narrow perks such as eased taxes on fishing tackle boxes, bows and arrows, and foreigners' gambling income, as well as massive tax breaks for corporate giants such as
In addition, Bush has called for making permanent the tax cuts that Congress passed at his urging in recent years -- a move he insists should take place immediately, before efforts are launched to simplify the tax code. Extending those tax cuts would drain more than $1 trillion from the treasury over the coming decade.
''He's caught in this trap -- anything you do now is going to make the tax code more complicated," said William W. Beach, director of the Center for Data Analysis at the Heritage Foundation, a Washington-based conservative think tank.
Bush campaign aides acknowledge that the tax code has gotten more complicated under the Bush administration, but they say that is the price of using tax cuts to spur economic growth. The trade-off was worth it, the president thinks, particularly in provisions like those that give parents more money through an expanded child tax credit, and that boost manufacturing companies, said Gary Blank, deputy policy director for the Bush-Cheney campaign.
''The tax cuts the president passed, he doesn't view as being special-interest provisions," Blank said. ''Is there a tension between simplicity and addressing priorities? Sure. I don't think anybody would deny that."
But Democrats say Bush is trying to cover aspects of his record by railing against taxes, a popular target. Bush has blasted Kerry as a ''Massachusetts liberal" who would seek to raise taxes on the middle class. (Bush's criticism of the ''million pages" of the tax code draws big ovations at campaign rallies, but even with additions under the Bush administration, the code is closer to 17,000 pages.)
Jason Furman, economic policy director for the Kerry campaign, said Bush is more interested in giving tax breaks to the rich than in making the tax code fairer for average taxpayers. ''This administration has undermined the opportunity for fundamental tax reform by giving away the candy -- trillions of dollars of tax cuts -- before [serving] the spinach -- the reforms which have winners and losers," Furman said.
Doug Shackelford, professor of taxation at the University of North Carolina's business school, said that Bush has unquestionably made the tax code more complex and that he has offered plans that would complicate it further under a second Bush term. The fact that Bush is ready to sign the corporate tax bill -- Shackelford called it a ''doozy" of special-interest tax breaks -- means Bush does not seem ready to embrace wholesale reform yet, he said.
Rick Klein can be reached at rklein@globe.com.
