The consensus seems to be that the Tax Reform Commission's proposals for, uh, tax reform won't actually go anywhere, and they're mostly just ideas for "discussion" rather than things the Bush administration will actually end up backing. (With sinking poll numbers and Karl Rove potentially out of commission, it's hard to see the president finding the gumption to cap the mortgage-interest deduction, ya know?) So let's "discuss." I realize no one on the House Ways & Means Committee plans on asking me, but here's one way to take a more progressive stab at tax simplification:

1. Find some way to slowly phase out the mortgage-interest deduction. Robert Shapiro has argued that it doesn't actually benefit home-buyers, since sellers just bid up the price of houses until they exactly offset the cost of the deduction, so in essence, it just acts as a taxpayer subsidy to the construction and real estate industries. Is that really worth it? Any phase-out would lower home values, though, so this step makes for thorny politics, but that's why you…
   
   
2. Simplify and expand the family tax credit. Rep. Rahm Emanuel has proposed a simplified, refundable tax credit available to all working taxpayers with children that would replace the EITC, Child Credit, Additional Child Credit, and Child and Dependent Care Credit—cutting away about 200 pages of the tax code. This would cost an extra $200 billion over ten years, which is a lot, but doable once we get to…
   
   
3. Earlier this year, David Cay Johnston reported on a paper by two tax experts noting that a number of investors overstate the price of stocks, businesses, and real estate, because they're allowed to report their capital gains and losses on the honor system, unlike wage-earners. Actual verification and enforcement of these reports could recoup at least $250 billion over the next decade.
   
   
4. It also seems like a good idea to consolidate, simplify, and expand, as Paul Weinstein, Jr., has suggested, both the various college subsidies into one single College Tax Credit, and the various tax savings vehicles—IRAs or 401(k)s—into a single and transferable universal pension account. Simplifies a lot, and good for all involved. I realize people like Paul Krugman have argued that college isn't for everyone, but might as well try to raise the numbers. Weinstein lists a bunch of corporate loopholes and tax deductions we could close to pay for these parts. Works for me.

That's not so hard. Those aren't earth-shaking steps, but they're all good, liberal things to do, and they do simplify the tax code quite a bit, especially for working families. I don't really see the point in repealing the alternative-minimum tax (AMT), which is there to ensure that the very wealthy won't exploit loopholes and dodge taxesl; if the AMT is falling on too many middle-class families then just raise the threshold and reform, rather than eliminate, it. I also don't really know how one would simplify capital gains taxation, which is obviously at the heart of any reform, but I'm sure there are decent ways to go about it. Oh yeah, and most of the Bush tax cuts are going to have to be repealed (for a start) to avoid fiscal disaster in the long run, but that's another story...

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