Marietta Daily Journal
February 3, 2006

Action needed on tax reform
By Don McKee

Tax reform gets a lot of lip service in Washington but not much action.

Now U.S. Sen. Johnny Isakson of Georgia is trying to force some action with a bill to terminate the existing tax code on December 31, 2008.

Congress would have to approve a new tax code by July 4, 2008 or be forced to reauthorize the existing code under Isakson's proposal.

Isakson's "Tax Code Termination Act" would also create a bipartisan commission to analyze tax reform proposals and report its findings to Congress.

"Either we keep the code we've got or get into the meaningful business of changing the tax code for the betterment of the people," Isakson told me in a telephone interview this week.

The senator expects this year's tax-filing date, which falls on Monday, April 16, will shock millions of taxpayers into action for reform.

"Tens of millions of Americans, possibly not fully under the alternative minimum tax, are going to file under AMT," Isakson predicted, and it's not going to be pretty.

The reason is that since the AMT went into effect about 40 years ago - because something like 19 people didn't pay any taxes - it's never been amended to allow for its effect on the income of middle-class earners. That oversight throws them into AMT category.

Isakson said the tax code needs fixing, not more tinkering. On that point, he was disappointed in the report of President Bush's 2005 tax reform commission.

"The time has come for overhaul," the senator said. "We continue to add on and tinker and adjust the code based on the environment we're in. The last time it was affected by the recession of '90. We need to get to a simpler system so Americans are contributing to the country in a proportionate manner."

Isakson's proposed National Commission on Tax Reform would consist of 15 members to be appointed by the president, the Senate majority and minority leaders, the speaker of the House and the House minority leader. Two of the commission members would have to come from businesses with fewer than 50 employees.

The commission would be charged with reviewing the structure and provisions of the Internal Revenue Code with respect to its impact on: (1) the economy including savings, capital formation and investment; (2) families and the workforce including distribution of the tax burden, (3) compliance cost to taxpayers including small and large businesses; and (4) the ability of the IRS to administer the provisions of the code.

The commission would have to look at tax systems of other countries to see if they are possibly more efficient and fair - and would have to come to a conclusion on whether the existing U.S. income tax system "should be replaced with a flat tax, a national sales tax or any other specified tax system."

Isakson is right that "all options should be on the table."

Given the inertia of Congress and the stranglehold of special interests, it's hard to believe this bill will get through.

But it is an idea whose time is long overdue.