Former Top-Ranking US Treasury Officials Call For Gradual Tax Reform

by Leroy Baker, Tax-News.com, New York

19 May 2005

Former high-ranking Treasury officials have urged the advisory panel on tax reform to recommend to the President gradual changes to the US tax code, warning that there is little precedent for a sudden shift to a new system such as a national sales tax.

"We would really be asked to think about going on an airplane on its first flight that has been designed on a computer model," observed Leslie Samuels, a former assistant Treasury secretary for tax policy during the Clinton administration, one of four former Treasury officials to testify at Tuesday's panel hearing in Washington.

Jon Talisman, another tax official under the Clinton administration, argued that smaller, incremental steps to reform the current income tax system would in themselves still represent quite radical reform in the longer term.

"It's easier to simplify the existing system than it is to make most consumption taxes fair and ensure simplicity," Talisman said. "There are things that are bold within the confines of a piecemeal approach."

Meanwhile, Mark Weinberger, a former deputy Treasury secretary within the first George W. Bush administration, agreed that the step away from an income tax based system to a consumption-based one would be "a difficult process" to complete.

Weinberger also believed that smaller steps, such as reform of state and local tax deductions, would in actual fact be a fairly bold proposition.

Also testifying before the panel was Pamela Olson, who served under Bush as Assistant Treasury Secretary for Tax Policy in Bush's first term. Although criticizing the national sales tax idea, Olson urged the panel to consider a type of value added that known as "credit invoice method VAT."

Senators Connie Mack and John Breaux, Chairman and Vice-Chairman of the President's Advisory Panel on Federal Tax Reform, announced on Tuesday that the panel is inviting interested parties to submit comments on the various tax reform proposals that have been presented to the Panel thus far. These comments should be submitted by June 10, 2005

"Our goal is to provide tax reform options that are simpler, fairer, and pro-growth, and so it is important that we continue to hear from Americans about the kind of tax system they want," said Senator John Breaux, Vice-Chairman of the Panel.

The panel must report its recommendations to the President by the end of July.

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