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Robert Novak is a nationally syndicated columnist. |
Chairman Bill's deal
WASHINGTON (Creators Syndicate) -- Rep. Bill Thomas of California, chairman of the House Ways and Means Committee, is the ultimate legislative poker player who keeps his hand shielded even from partners.
But he showed a few cards during the recent Republican retreat at the Greenbrier resort in White Sulphur Springs, West Virginia. His fellow Republican congressmen were astounded.
The chairman's deal bore little resemblance to George W. Bush's plan for Social Security and tax reform.
Thomas indicated he would marry Social Security with total repeal of the corporate income tax, which would be replaced by a value-added tax (VAT). As for simplification of individual taxes, he indicated that is off the board -- contradicting desires of many Republican congressmen.
As he enters his fifth year as chairman, has Thomas overstepped himself?
Social Security reform is a massive legislative undertaking, and he magnifies the difficulty with the additional complicated task of establishing a VAT.
Furthermore, he is pressing his own policy without guidance or approval from the White House. He is a masterful, domineering personality who until now has bent Ways and Means and the House itself to his will, but never on an agenda of this dimension.
President Bush always intended to pass Social Security reform this year, postponing an unspecified tax reform until an undetermined time in the future. However, Thomas has been suggesting it would be efficient to combine Social Security and tax reform.
But Bill Thomas and George W. Bush are on very different wavelengths when it comes to reforming taxes. Bush contemplates an overall simplification of the Internal Revenue Code. Thomas does not.
During the retreat starting January 28, Thomas revealed some of his cards. While transforming Social Security, he also would repeal the corporate income tax and replace it with a VAT paid by the consumer.
Thomas told his colleagues of multiple advantages for the U.S. in international trade and hinted at a bountiful increase in federal revenue -- money that would be useful in addressing the Social Security shortfall.
Thomas's uncharacteristically buoyant optimism abruptly ended when he turned to the flat tax as a possible simplification of individual taxes.
He posed difficult questions to the assembled House members. Would you and your constituents be willing to give up the home mortgage deduction? The charitable contributions deduction? The deduction for state and local income taxes?
Since the answer to all of these questions is obviously no, Thomas went on, the tax rate would have to rise to recapture revenue. But that rate would be too high for low-income taxpayers, and there would have to be at least two rates. There goes your flat tax, with one low rate and no deductions.
This logical recognition of the flat tax as a non-starter has led many in Congress to a different path to reform based on taxing consumption.
The "fair tax" -- repealing all income taxes and replacing them with a national sales tax -- has attracted 44 House sponsors and interest from no less than President Bush and House Speaker Dennis Hastert.
At this point, still using the Socratic method, Thomas asked how many of his colleagues' constituents would welcome walking into a store and paying 30 percent of the retail cost with a sales tax.
Once again, the answer was no. Thus, the chairman had swiftly ruled out both the flat tax and the national sales tax, and therefore vetoed individual income tax reform.
A tax agenda that eliminates the corporate tax but otherwise retains the horrid complexity of the Revenue Code and establishes a VAT will draw huzzahs from the business lobbyists of K Street who normally balk at tax reform.
However, the lethal combination of a VAT and the present federal income tax that Thomas proposes always has been unacceptable to conservatives.
House Republicans at the Greenbrier, including even some Ways and Means members, don't like the hand dealt them by the chairman.
The speculation on Capitol Hill that the House will play these cards anyway is based on Thomas's legislative mastery the past four years. But that record was forged in partnership with the president and the speaker.
He is going it alone this time.
