As we file our often complicated income-tax returns this April, should we take heart that President Bush's budget includes a section titled "Simplify the Tax Laws"? Not really. Elsewhere in the budget are some five dozen proposed tax breaks that would cram even more lines onto the already overcrowded Form 1040. But Bush's feigned call to simplify is much worse than mere chutzpah.
Of Bush's three so-called simplification measures, one is trivial, one is nothing but a sop to a few very well-off taxpayers and one is truly insidious.
I've long been a bit of a conservative on fiscal policy. Of course, that dates back to when conservative was spelled with a "c." What passes for conservatism in this country these days seems to be a combination of kooky economic theories, gross irresponsibility and shady rhetoric. Take, as a leading example, George W. Bush. "This country has many challenges," the president pointed out in his State of the Union address. "We will not deny, we will not ignore, we will not pass along our problems to other Congresses, to other presidents and other generations. We will confront them with focus and clarity and courage." Nice sentiments, but of course Bush was just kidding.
If, like our president and vice president, you strongly believe that cutting taxes leads to higher tax revenues, the past year and a half must have been very disappointing. Despite the huge tax cut enacted in the spring of 2001, personal income-tax collections have plummeted since George W. Bush took office, dropping from 10.1 percent of the economy in fiscal 2000 to 9.6 percent in fiscal 2001 to only 8 percent in fiscal 2002. But, sadly, dashed hopes haven't led to second thoughts. On the contrary, Bush has decided that our economy is lagging because his 2001 tax cut simply wasn't big enough. So now he wants to increase it -- by more than half.
When George W. Bush hired a new economic team in early December, the press speculated that the change might bring a glimmer of fiscal sanity to the administration's economic policies. Don't bet on it. As Stephen Moore of the anti-tax, big-deficit Club for Growth cult put it, whatever their past records, the new boys will "drink the Kool-Aid." And sadly, our president will keep proposing the same solution to every problem: more tax cuts for the rich. So here are a few things to keep in mind as this year's tax debate unfolds.
Something I've drummed into my staff over the years is that no analysis is complete until it's passed a reality check. By that I mean that everything we do must be recalculated using alternative approaches to ensure that we haven't made some silly mistake. Unfortunately, this lesson doesn't seem to be taught at the Bush Treasury Department.