Washington – Declaring the income tax system “has become a running joke,” a presidential panel on Tuesday recommended rewriting the nation’s tax laws by eliminating virtually every deduction and credit and replacing them with simpler benefits for more taxpayers.
Treasury Secretary John Snow said he would study the report, issued by the President’s Advisory Panel on Federal Tax Reform, and hoped to present recommendations to President Bush later this year.
“These are bold recommendations,” Snow said. “These are recommendations that will challenge orthodoxy in a lot of ways on tax policy.”
The nine commission members said key recommendations would be unpopular.
“Many stand waiting to defend their breaks, deductions and loopholes, and to defeat our efforts,” the group said in a letter to Snow.
The panel criticized lawmakers’ tendency to use tax code to promote their policy agendas, noting there had been 15,000 changes in tax laws since the last major rewrite in 1986.
In place of current tax breaks, the panel would create a few tax credits and three savings accounts that they said would encourage homeownership, charitable giving and saving while also supporting lower income workers.
In another major change, taxpayers could buy health insurance using untaxed money up to about $5,000 for an individual and $11,500 for a family, a change that caps currently unlimited breaks but would create a new tax break for those who do not get health insurance through work.
