Wednesday, October 19, 2005

Low comedy and high taxes

There's a memorable scene in the BBC sitcom "Yes, Minister" in which the newly appointed British government official confronts some politically treacherous decision that appears to be a career-ender, whichever way he decides.

"What should I do?" the panicked official asks the calm civil servant who is the real head of the department.

"I think you should appoint a commission of inquiry," the staffer says dryly.

"A commission of inquiry!" the minister exclaims in relief as a blissful smile spreads across his face.

This week the President's Advisory Panel on Federal Tax Reform released its recommendations. The final report isn't due out until November 1, but already it's clear that the plan could be useful as a textbook for a clown college course on pratfalls.

Approaching its silly task with great somberness, the panel attempted to design a simplified tax code that collects exactly the same amount of money as the current tax code. Here are some of their side-splitting recommendations:

- Eliminate the federal tax deduction for home mortgage interest

- Eliminate the federal tax deduction for state and local taxes paid

- Put a cash value on employer-paid health benefits and make people pay taxes on that amount as if it were cash income.

- Limit the amount employers may deduct for health insurance premiums they pay for their employees

These proposals, made by panelists who are not planning to put their names on a ballot ever again, were part of an effort to replace the revenue the federal government would lose by enacting a reform that Congress really intends to do, the elimination of the alternative minimum tax.

The alternative minimum tax was put into the tax code years ago after reports that some gazillionaires were using tax deductions and credits in a way that permitted them to pay no federal taxes at all.

Little did Congress expect that the combination of inflation and child tax credits would put so many of their constituents into that category.

Today, lots of middle class families with children pay no income taxes at all and tell pollsters they think taxes are "about right" while people who don't have children pay taxes at artificially high rates to cover their free ride.

It's the child tax credit, not the alternative minimum tax, that's the bigger source of unfairness in the tax code.

In any case, the commission's work is nearly done and now President Bush has the unenviable task of pretending to take their recommendations seriously.

He'd better practice in front of a mirror before he tries it in public.

Copyright 2005