Friday, January 07, 2005

President Bush's Tax Reform Panel

President Bush finally named his tax reform commission, ostensibly charged with devising his tax reform plan. The co-chairs are former Senators Connie Mack (R-Fl) and John Breaux (D-La). The other 7 members are:
--former IRS Commissioner Charles O. Rossotti
--Professor Jim Poterba of the MIT Economics Department
--former GOP Representative Bill Frenzel of Minnesota
--Professor Beth Garrett of USC Law School
--Professor Edward Lazear of the Stanford Business School
--Timothy Muris, with O'Melveny & Myers LLP in Washington
--Liz Ann Sonders, chief investment strategist with Charles Schwab.

The only member of this group not previously known to me is Ms. Sonders. With all due respect to the group, whose members generally deserve a great deal of respect, the membership of the commission tells me that we are not likely to get anywhere significant, be it good or bad, on tax reform.
To start with a cheap shot at the top, Connie Mack will never live up to the achievements of his father or grandfather, the famous Philadelphia A's owner and manager. If I am remembering correctly, he had the reputation of a right-wing hack whose only known tax policy idea was to cut taxes.
Breaux was a noted centrist or conservative Democrat available for compromise deals with Republicans. He actually is the sort of person whose involvement you'd expect if the Commission were really going to get anywhere. For example, if progressive consumption taxation, the pet idea that I and some others in the tax policy field have been pushing lately, were ever to be pushed seriously on a bipartisan basis, you might expect someone like him to be prominently involved. But I suspect he was the only prominent Democrat that the White House could line up for this.
The seven other members generally have a great deal of merit. Poterba is considered by many to be the best public finance economist of his generation, give or take one or two other people whom I would also like to call the best. Garrett is a first-rate law professor, Lazear is a fine economist, Frenzel was a highly respected member of the House of Representatives (and, believe me, I don't think most of them deserve much respect), and Muris is eminent though his field, as I understand it, is really regulation. Rossotti did a lot to restore the IRS's public image. (If this seems inherently implausible, you may need a refresher course on what its image was like before he led it.)
For the most part, however, these are not people who have been heavily involved in thinking about or designing tax reform. E.g., Garrett's writings mainly concern the legislative process and institutional design; Poterba is an outstanding econometric researcher on issues such as savings behavior by households; Lazear, while he has wide-ranging interests, is mainly a labor economist; and Muris is a former FTC Chairman. And they are not, so far as I know, identified with particular approaches to tax reform. So they would have an uphill climb under the best of circumstances. And though they might come up with some interesting ideas if given the chance, I seriously doubt the White House is interested in finding out what they really think. This is not exactly a White House that cares much either for expertise or for delegating authority to those outside the charmed circle.
Nor does the commission seem likely to have much blue-ribbon-panel-style political heft in Washington, especially as Bush nominated them unilaterally in a heavily partisan environment. (Compare the bipartisan Social Security panel that Reagan and Tip O'Neill jointly appointed in the early 1980s.)
By the way, no tax practitioners. Those guys actually do know a lot, and serious tax reformers might want to involve them. No tax law professors, apart from Garrett who is excellent but really does her work elsewhere. And, while it's hard to quarrel with the choice of Poterba, many first-rate economists on both the left and the right have done extensive work that comes closer to the commission's territory.
So with all due respect to the generally high abilities of the commissioners, I think that the decision to choose this panel is evidence that fundamental tax reform (a) either is meant not to go anywhere, or else insufficiently meant to go anywhere in particular, and (b) will in fact not be going anywhere.


Daniel Shaviro said...

Well, that would certainly be no surprise, but it isn't exactly a sweeping overhaul of the income tax.

JoshSN said...

Breaux is a savvy-enough-not-to-say-it racist. He's a pre-64 Southern Democrat.

Being a Senator from "cancer alley," Breaux is well acquainted with donations from the oil and oil services sector.

I'm sorry so many Democrats respected the most right wing of Democrat Senators (which still put him to the left of almost all Republicans), but he did look good in a suit.

Breaux has a grasp of one idea that I know about, namely, the problem of Greece and Liberia being the ship registrars of first resort.

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