Friday, March 13, 1998

Time is near for sun to set on tax code

In defending the federal tax code the other day, while attacking a Republican plan to scrap it and replace it with something else, President Clinton said, "No one concerned about fighting crime would even think about saying, 'Well, three years from now we're going to throw out the criminal code and we'll figure out what to put in its place.' "

For reasons that may not have occurred to him, the president's comparison was particularly apt. The tax code, like the criminal code, is an instrument of punishment, the difference being that the tax code most often punishes the innocent.

It punishes honest taxpayers by its endless complications, by its unfair, initiative-defeating rate structure, by its provisions that thwart savings and growth and by the way it allows the federal government to pry into almost any aspect of a citizen's life it chooses.

Criminal messiness

The criminal messiness of the income tax is what has prompted congressional Republicans to propose eliminating it through a sunset measure by 2001. Clinton said that, in the absence of a sure replacement, this would be a reckless move that could cripple the nation's robust economy.

But three days, much less three years, would be plenty of time to devise a reasonable version of a flat tax, which appears to be the favored alternative of most congressional Republicans, well ahead of a national sales tax. And if no replacement was on hand at the designated time, a simple remedy would be to scotch the sunset law.

The Republicans, usually back on their heels in the face of the public-pleasing programs Clinton promotes, have latched onto simplifying taxes and making them more fair as a popular idea that will be of special service in this year's elections, especially if the specifics can be postponed until later.

Transformative idea

Here is also a major, substantive and potentially transformative idea, apparently beyond Clinton's imaginative reach. For all his talk about wanting to go down in history, this president chiefly advances policies marked more by their opportunism than any likelihood of effecting large and positive change.

Clinton's well-received speech the other day was at a meeting of the Mortgage Bankers Association of America, an organization that wouldn't much like it if the tax deduction on mortgage interest went away.

That's what would happen under some flat tax proposals, although taxes generally would go down sufficiently to compensate for a homeowner's loss. The Republicans are going to have to hope such points about a new system do not escape the voters, who already are well-acquainted with the problems of the existing system.