Tax Reform

Add yet another thing to President-elect Barack Obama's to-do list: Tax reform. If Timothy Geithner -- the guy Obama wants to run the Treasury Department -- could make $34,000 worth of mistakes on recent federal tax returns, then clearly this is a system so bloated and complex as to be incomprehensible to all but the most pointy-headed accountants.

President-elect Barack Obama says he is open to new ideas about how to stimulate the economy. I heard him say it on TV. So here's an idea for cranking up cash registers while also helping to bail out California's virtually bankrupt state government. It's not a new idea by any stretch. It's an oldie, but one that makes sense to replay: Simply restore the pre-1986 law that allowed all Americans who itemize on federal income tax forms to deduct their sales taxes.

Last week's release of the final report by a blue-ribbon panel on tax reform for California was accompanied by all the ceremonial obeisance customarily paid to groups of public-spirited citizens completing a difficult task. There was praise for their public spirit and donation of unpaid time. Their report was hailed in Sacramento as a judicious foundation for a necessary reconsideration of our crumbling tax system. I have another view: It was a shamefully squandered opportunity.

Chinese lawmakers approved a tax overhaul Friday that would eventually end nearly three decades of preferential treatment for foreign companies. The measure is likely to pinch a variety of U.S. and other foreign corporations, particularly larger manufacturers, whose sales and profits have been growing robustly in China. But analysts don't expect a significant slowdown in foreign corporate investment in China, given the country's large market, extensive supply chain and rapid growth.

President Felipe Calderon has sent federal troops to hot spots around the country to combat drug traffickers in recent months. But another group of scofflaws may prove even tougher to bring to justice: Mexico's tax cheats. In the next few weeks Calderon's administration will unveil a revenue-raising plan that will probably prove as divisive as it could be pivotal for Mexico's future. Mexico needs better tax collection -- and fast.

If Los Angeles business leaders were looking for somebody to carry the torch on one of their most important causes, it's a safe bet that Wally Knox wouldn't rank very high on the list. The former Democratic assemblyman acknowledges that he had a reputation in the state capital as a "wild-eyed, union-loyal liberal."

Californians last week poured billions more into a warped state tax system that badly needs restructuring but leery political leaders won't touch. Democrats are afraid to go near the apparatus for fear of being labeled tax-and-spenders. Republicans are prone to pander to the populace by advocating tax cuts, even while the state is spending billions more than it's taking in. During a four-day period starting last Monday, Californians mailed in roughly $3.

A key senator said Tuesday that he wanted to change a quirk in the tax law that has allowed companies to claim tax deductions for stock options that are billions of dollars more than the option expenses on the firms' books. The discrepancy, which reflects different rules for accounting and taxation, came to $43 billion from December 2004 to June 2005, according to the Senate Permanent Subcommittee on Investigations. Sen. Carl Levin (D-Mich.

Mexico would impose new taxes, close corporate loopholes and crack down on scofflaws in the underground economy under a plan to boost revenue unveiled Wednesday by Mexican Finance Secretary Agustin Carstens. The proposals submitted to congress mark the beginning of what promises to be fierce debate this year over how to boost tax receipts in Mexico. The nation has one of the least effective tax-collection systems in the Western Hemisphere.

WHERE'S the fun? That's the feeling you get watching the Democrats in Washington this summer. Gone is the happy plan for a frenzy of lawmaking, the "Hundred Hours" of action Speaker Nancy Pelosi promised when the Democrats took the House. The speaker's artful allusion to Franklin D. Roosevelt's "Hundred Days" quickly became an ironic echo.