Bush names committee to study tax code reform

President Bush yesterday appointed a commission to think of ways to simplify the federal tax code, giving it until July 31 to report its ideas.

“A simple code will make it easier on the taxpayers,” Mr. Bush said after meeting in the Oval Office with the chairmen of his commission, former Republican Sen. Connie Mack of Florida and former Democratic Sen. John B. Breaux of Louisiana.

“These fine, distinguished citizens will be taking a good hard look at the tax code and coming up with recommendations as to how to make sure the tax code encourages economic vitality and growth,” he said.

The president did not offer any specific ideas of his own, but conservatives have been pushing the White House for radical action — either implementing a flat tax or a federal sales tax that would eliminate the income tax.

“It seems like to me the tax code today discourages economic vitality and growth when you spend billions of hours filling out the forms,” Mr. Bush said.

The bipartisan commission includes William Eldridge Frenzel, a former Republican congressman from Minnesota who served on the tax-writing Ways and Means Committee; Elizabeth Garrett, a law professor at the University of Southern California and former legislative director and tax and budget counsel to former Democratic Sen. David L. Boren of Oklahoma; Edward P. Lazear, a Stanford economics professor and senior fellow of the conservative Hoover Institution; and Timothy J. Muris, a former chairman of the Federal Trade Commission under Mr. Bush.

Most Democrats have opposed Mr. Bush’s tax cuts and are concerned that his reforms will reduce the progressive nature of the status quo, where the wealthy pay most of the federal income tax.

“We see a White House looking for so-called recommendations only from those everyone knows will agree with the administration,” said Rep. Charles B. Rangel, New York Democrat and ranking member of the House Ways and Means Committee. “That’s not leadership; it’s closed-mindedness.”

Treasury Secretary John W. Snow said “everything is on the table” in reforming the tax code to “serve the interests of growth and simplicity, reduce complexity and make the code something we can all take more pride in.”

“This thing is on fast track as far as the timing is concerned in comparison to other advisory commissions,” Mr. Breaux said.

Mr. Snow said he expects the commission’s work to lead to legislation that can be taken up in Congress before the end of the year.

“I think we’re going to get a terrific result from this panel,” Mr. Snow said.

The Business Roundtable, a lobbying group with influence among Republicans and in the White House, applauded the creation of the commission.

“We encourage the president’s advisory panel to recommend reforms that will make the U.S. tax system competitive with the tax systems of our major trading partners,” said J.T. Battenberg III, chairman, chief executive officer and president of Delphi Corp., and chairman of the Business Roundtable’s Fiscal Policy Task Force. “A level playing field for U.S. companies to compete with foreign competitors is essential to maximize the growth of our economy.”

According to a Business Roundtable study, the United States has the third-highest corporate tax rate of the world’s largest economies.

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