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COMMENTARY: THE LOOMING BUSH TAX FIASCO By Scott Bennett Print E-mail
by Scott Bennett    Sat, Oct 29, 2005, 01:04 PM

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President George Bush
Almost everyone agrees that Texas’ taxes are a mess. Some segments are badly overtaxed (homeowner and manufacturers) while some are hardly taxed at all (services and trusts). The state’s Robin Hood school finance scheme does more stealing than giving. Unfortunately no one agrees on what should replace it. As the late Bob Bullock used to say “don’t tax you and don’t tax me tax that guy behind the tree.” At tax reform time there usually aren’t any guys behind trees they are front and center lobbyist in tow.  So here is wishing former Comptroller John Sharp good luck as he attempts to tackle the issue at the behest of Gov. Perry.

The last guy to tackle the tax issue was then Governor George W. Bush. His efforts were virtually a total failure, and especially upset conservatives.  But it did much to burnish his image as a moderate reformer and that served his Presidential ambitions well. Indeed, many believe an exercise in credential burnishing was all Bush ever intended.

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John Breaux (D-LA)
Maybe, but President Bush still seems to have the tax reform fever and new appears ready to use the issue to revive his Presidency. He has appointed a commission headed by two slightly right of center ex-senators (Democrat John Breaux and Republican Connie Mack) that is preparing recommendations. They are expected to report their recommendations early next year.226177-199283-thumbnail.jpg
Connie Mack (R-Florida)

Right now the DC skies are as full of trial balloons as the Plano skies during the hot air balloon festival so it is hard to know just what the final version might contain. But if the balloons are indication of the final product the reform effort is more likely to finally bury the Bush presidency and the GOP with it.

The panel has rejected the kind of fundamental overhaul that would switch the country from the income tax to a consumption tax or border adjusted business activity tax and appears ready to opt for a long line of certain to be unpopular proposals.  For example, the Commission is seriously considering capping the deduction for mortgage interest and health care. The idea is to shift more of the tax burden from the poor and middle-class to the wealthy. The Commission would turn mortgage interest deductions into a tax credit thereby allowing those who don’t itemize to gain benefit from the deduction (now, how many people with mortgages don’t itemize?).  However, Breaux concedes the proposals will be opposed by labor and the economically critical homebuilding industries.

There are lots of other such changes sure to antogonize some significant constituency.  What the recommendations apparently will not do is either raise additional revenue or cut tax rates. Without doing one or the other Bush will have absolutely zero support, but Democrats will have an unending vein of unpopular proposals to mine come election time.

Surely the US needs sweeping tax reform. But that requires rallying conservatives for overall rate cuts partially offset by broadening the base (that means ending tax subsidies for business) or rallying liberals by raising more cash for government programs. If the balloons are any indication of the reality Bush will manage to outrage both sides and achieve nothing.  Somebody stop this guy before he reforms again.

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