True tax reform

"Reforming" taxes under Dubya has been like reforming the number of limbs on your body or reforming the number of apertures in your head. The budget, the economy, and the truth have been bludgeoned all out of shape by tax "reform" from the Republicans. Dubya and his compliant Congress have rammed through giveaways that have, to put it mildly, exacerbated the disparity between the rich and the rest of us.

With tax cuts, as with the War in Iraq, the rationale changes to fit the changing PR requirements. Originally it was "because it's your money" (and the government shouldn't be running surpluses with your money). Then the economic downturn of 2001 offered the chance to say, "to stimulate the economy." The design of the tax cuts did not follow that stated goal, since they were targeted to the rich and not to the middle or lower classes. And the effect certainly has not been a stimulated economy. See the Economic Policy Institute's "The Boom that Wasn't" at epi.org.

A real reform comes from the Progressive Policy Institute's tax man Paul Weinstein, Jr. See "Family Friendly Tax Reform" at ppionline.org. (I have some difficulties with PPI, the "Third Way" descendent of Clinton's Democratic Leadership Council, but they're right on track here.)

Progressive candidate alert: Weinstein's scheme is politically do-able. When the pendulum swings back this way, people will want to see real change. This is not extreme. It's a first step. And it's an object lesson on the differences between the political sides. It's simple. It's economically sound.

The PPI proposal would eliminate 68 tax breaks and replace them with four new tax incentives that would come in "above the line" and thus be available to substantially more taxpayers. The $436 billion in net new tax relief to American families would come from consolidating current breaks and cleaning up some of the bias in the code toward wealth and privilege. There's plenty more to be done to make taxes adequate, but this goes a long way to making it more fair.

The four basic elements are easy to understand: college, homes, families and pensions.

1. A refundable college tax credit would provide up to $3,000 per year to students. This is more generous and simpler than the current system.
2. The home mortgage deduction would move to the front page of the tax form. Currently only one-half of the 72 million homeowners itemize, and thus are able to take the credit.
3. A family tax credit would replace three existing incentives and provide greater benefits to more families. Right now a taxpayer has to sift through more than 200 pages of instructions and other material to apply for the several different breaks.
4. A universal pension would replace IRAs and the other 15 existing accounts with one simple, portable retirement account for all. It would even provide a $500 stake to get people into the UPs.

The tax code has been abused, not reformed by Republicans. Tax breaks during wartime, in itself, is a concept which demonstrates Dubya's Queen of Hearts mentality.We are on the cusp of going from a bell curve economy, with a strong middle class, to a barbell economy, with wealth at the top and poverty at the bottom and a middle class that is stressed, thin and unable to support the kind of society we have long taken for granted as our right. Weinstein has rooted out some of the most egregious giveaways to the rich and used them to pay for the net cost of real "reform" and "relief."