December 4, 2005

Bush may delay push for major tax overhaul

By Caren Bohan

WASHINGTON (Reuters) - The White House may delay unveiling
a broad proposal to overhaul the tax code until 2007 or later,
despite earlier discussions of making it a major theme for next
year, people close to the White House said.

A panel named by President George W. Bush has recommended
sweeping changes to the tax code, including reducing deductions
for home mortgages and state and local taxes.

Bush is having the Treasury Department review the
recommendations and submit a plan to him.

The White House had initially considered having Treasury
prepare a plan by the end of the year that could form the basis
for a proposal in Bush's State of the Union address.

But several Republicans with close administration ties said
it now seems likely Bush may only speak generally about tax
reform in the address and not unveil specifics.

"I don't think there is enough time to churn out a policy,"
said one Republican, who spoke on condition of anonymity.

Time Magazine, in its latest edition, quoted a White House
official as expressing doubt that a major proposal to change
the tax code could attract Democratic support in a mid-term
election year.

"No one wants to put something out there that's not going
to go anywhere," the magazine cited a White House official as

The Republican source who spoke to Reuters noted that
several elements of the tax panel's recommendations, most
notably the proposed cut in the home mortgage deduction, are
controversial and making major revisions to the commission's
report might take a great deal of time.

The position at Treasury that would normally serve as a
clearinghouse for such efforts -- the assistant Treasury
secretary for tax policy -- has been vacant for several months.
"There is not the manpower to do it," the source said.


In addition to curbing deductions like those for home
mortgages, the commission also proposed limits on the
tax-preferred status of employer-provided health insurance.

The commission also recommended reducing the number of tax
brackets and eliminating the alternative minimum tax, a
parallel tax system that increasingly hits middle-class

A second Republican who spoke to Reuters on condition of
anonymity said the White House was not "at loggerheads" with
the commission over its findings but there is a belief that an
election year was not the best time to sell the public on such
a detailed initiative.

"The complexity would turn people off," the source said.

Many Republicans are wary of embracing a controversial and
complex initiative after Bush's drive to overhaul Social
Security proved unpopular.

In an opinion piece published in the Washington Post just
days after the tax report was released, Rep. Tom DeLay of Texas
pointed to a "minefield of serious political trouble" in some
aspects of the report, such as the home-mortgage proposal.

Treasury Secretary John Snow had said in late October that
he hoped to present his findings on tax changes to Bush by the
end of the year but the administration more recently has been
noncommittal on the timing of the tax initiative.

"The timing is unclear," White House economic adviser Al
Hubbard told reporters on Friday. "In terms of priorities for
next year, that's up -- I'm going to leave it up to him to
share his priorities with the American people."

While commending the tax panel's work as "excellent,"
Hubbard added, "That's not to say we're signing off on what
their proposals are."

(Additional reporting by Mark Felsenthal)