Don't nuke the federal tax code fix it

March 16, 1998

The Philadelphia Inquirer said in an editorial Thursday:

THE dumbing down of American politics continues apace.

Now we have "Kill the code," not just as a slogan sneered at the tax system, but as an empty-headed bill that might actually pass Congress this election year.

The bill would kill the current federal tax system by 2001. It is silent on what ought to replace it.

The supposed rationale is that national leaders won't reform the system unless they have a deadline.

In fact, what really appeals to congressional leaders about this time bomb against the status quo is that it makes them look like bold reformers in time for the election -- without forcing them to decide on a new system. Which is lucky, because Republican leaders can't agree on what the new approach ought to be, any more than the public can.

GOP leaders are split between two gambits for giving upper-income folks the big-time tax relief that Steve Forbes & Co. deem right and proper. There's the flat tax -- a single tax rate no matter how much you make -- which would clobber the middle class. There's that nightmare for low- and moderate-income workers -- the national sales tax -- which would also pinch Mr. Forbes and Donald Trump when they buy a quart of milk or a yacht, but would let their profits roll in tax-free.

By the way, Rep. Richard A. Gephardt of Missouri and other Democrats have some good ideas for simplifying the code while aiming tax relief at Americans who actually need it, but so far they haven't brought the same camera-hungry energy to the discussion.

As Democrats wade more deeply into this fight, they must insist on a basic point that many people dazzled by Steve Forbes' goofy smile and logic seem to forget: You can make the tax code simpler without making it less fair (i.e., more flat).

"We cannot and must not sacrifice the idea of taxation based on the ability to pay," said Deputy Treasury Secretary Lawrence Summers. Amen.

Even if the flat tax or the sales tax made sense -- which they do not -- nuking the current code as a warm-up act would be irresponsible. The resulting uncertainty would throw corporate planners and individual investors for a loop -- hurting a humming economy.

Besides, the very premise of the gimmick -- that sweeping tax reform requires a drop-dead date -- is false. It was only 12 years ago that Congress and former President Ronald Reagan teamed up on a major tax code rewrite that, despite flaws, did make the code simpler and fairer.

In 1986, nobody had to nuke the existing code in advance to get the law passed. All it took was lawmakers acting, for one long moment, like adults.

Pub Date: 3/16/98

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