WASHINGTON -- As the White House prepares to name a panel on tax reform, the labyrinthine U.S. revenue code could face the first top-to-bottom rewrite since President Ronald Reagan closed loopholes and slashed income tax rates on a historic scale in 1986.
"This is a fundamental look at the entire code, every component of the code," a senior administration official said late last week. "Nothing is off the table."
Yet some political analysts and policy advocates believe the result could turn out to be considerably more modest. The commission might come up with provocative proposals, they said, but that does not mean the president will put his weight behind them.
"I don't think you'll see in the next four years a 1986-style, Ronald Reagan tax reform bill," said Grover Norquist, president of Americans for Tax Reform, a conservative advocacy group. "The whole purpose of this is to get the debate going."
Even if Bush decides to push for major tax revisions, he will probably be constrained by the soaring federal budget deficits that began in his first term, spurred in part by his huge tax cuts. Bush has made renewal of those cuts a high priority, stirring concern among Democrats and some Republican conservatives about the effect on the deficit. The president has said any broader program of tax reform must not worsen the deficit.
Basking in the glow of last week's electoral victory, Bush declared that revamping the tax code was at the top of his second-term domestic agenda, along with Social Security reform.
But the president offered only vague clues as to what he had in mind on taxes: The system should be made simpler and fairer. It should encourage saving and reward risk. There should be fewer "loopholes" for special interests, he said, but "incentives" such as the deductions for mortgage interest and charitable contributions should be retained. And the changes, whatever they are, should not cause overall tax collections to rise.
"Simplification would be the goal," Bush said Thursday during his first post-election news conference. "The main thing is that it would be viewed as fair, ... that it wouldn't be complicated."
Administration officials said the next step in the process would be the appointment by year's end of the commission to study reform options. Bush revealed his intention to name the group during his renomination acceptance speech at the Republican National Convention in New York in August.
Who will serve is not known, but the panel will be asked to finish its review and forward its suggestions to Treasury Secretary John W. Snow early next year. Snow will review the findings and send a final set of recommendations to Bush.
The administration will not advance any tax legislation until the panel's recommendations are in hand, said the senior official, who declined to speculate on which proposals would or would not make the final cut.
"They'll be looking at the whole thing with three principles in mind: The fundamental reform should be more fair, more simple and more growth-oriented," the official said. "That's their marching orders."
Several experts predicted that rather than present Congress with a single sweeping initiative calling for equal measures of pain and gain, Bush will probably advance his tax agenda in piecemeal fashion, with as few losers as possible.
The starting point would be legislation to make Bush's previous income tax cuts permanent, analysts said. Many provisions of the $2 trillion in tax reductions approved since Bush took office will expire by 2011 unless Congress extends them.
A similar effort is expected to abolish the estate tax -- or "death tax," as it is known by its opponents. Although the estate tax is being phased out, it will return in 2011 unless Congress acts.
Separate bills could be introduced to broaden and perhaps consolidate tax-sheltered savings vehicles such as individual retirement accounts and 401(k) accounts, further reduce taxation of capital gains and dividends, and expand business "expensing" by letting companies claim bigger initial deductions for investments in plants and equipment.
Another contender is legislation to rein in the alternative minimum tax. The levy was created to make sure wealthy filers could not evade taxation by claiming many deductions and credits. But it was not indexed for inflation, and more middle-class taxpayers are falling into its grasp.
"The likely result of this is not a big, grandiose plan, but rather incremental steps that take us toward a simpler, more pro-growth tax system," said Stephen Moore, president of the Club for Growth, a conservative advocacy group.
"Look, we all want to have a flat tax," Moore said. "We know what the Garden of Eden is. So let's make sure that every change we make with tax policy is moving us in that direction."
That is what has occurred with the tax cuts approved during Bush's first term, according to some analysts.