WASHINGTON — As the White House prepares to name a blue-ribbon panel on tax reform, the labyrinthine U.S. revenue code could face the first top-to-bottom rewrite since President 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 think the end 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 is likely to be constrained by the soaring federal budget deficits that began in his first term, spurred in part by his huge tax cuts. Bush has already 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 existing "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 postelection 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 special 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 September.
