Updated October 22, 2005








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By John Tiffany

A national tax reform group has blasted a White House panel that quietly met in October to propose drastic changes to the U.S. tax system.

According to Americans for Fair Taxation, the meeting was “fraudulent political theater designed to protect the corrupt tax code and those who profit from its manipulation.”

The President’s Advisory Panel on Federal Tax Reform has been charged with formulating recommendations to make the income tax a fairer and more economically productive system. Its final report is due out on Nov. 1.

However, Leo Linbeck, chairman of Americans for Fair Taxation, says he saw through the ruse.

“When a presidential panel engages in such activities it does a great disservice to the people,” said Linbeck. “Far from making suggestions for fundamental reform, this panel has actually suggested making the code more complex, more intrusive and more harmful to the economy and the well being of American citizens.

“The panel has thrown up a smokescreen with a fake consumption tax program, continued tinkering with the code at the cost of health care benefits for American workers and recommended a scheme to punish homeowners in high cost areas of the nation in an attempt to solve the problems created by another lobbyist-driven reform which gave us the Alternative Minimum Tax [AMT].

“In addition, the panel wants to enlist credit card companies to monitor spending of Americans and report their findings to the IRS,” said Linbeck.

“It is painfully obvious that Washington insiders so closely linked with the status quo cannot be trusted to overturn the corrupt system of federal taxation. This effort will have to be driven by the American people.”

The AMT is a piggyback tax within the individual income tax, originally designed to cover wealthy people with an inordinate number of deductions that allow them to escape any tax. Because it is not indexed to inflation, over time it now covers increasing numbers of people who are not rich.

The chief option commission members have put forward is to eliminate the AMT, which would be a tax cut for the relatively wealthy, and to replace the cut revenue by reducing or eliminating deductions for health insurance, home mortgage interest and state and local income tax.

New York lawmakers denounced the tax panel offering of a simplified income tax system that would no longer allow taxpayers to deduct what they pay in state and local taxes.

Said Max B. Sawicky, an economist at the Economic Policy Institute:

“With the death of his Social Security privatization scheme, President Bush is trying to resuscitate his domestic agenda with an electric slide to tax reform. Some things never change: Doubtless, Bush will try to continue comforting the comfortable and afflicting the afflicted by shifting the tax burden from the wealthy to everyone else.”

(Issue #44, October 31, 2005)

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