MISSOURI COMMENTARY: A BILL ONLY H&H BLOCK CAN APPRECIATE

Ages ago -- 1986 to be exact -- there was a movement to make the Internal Revenue Code fairer and simpler. Senator Bill Bradley, D-N.J., and Congressman Dick Gephardt, D-Mo., led this noble cause and, in part, they succeeded.

The ink was barely dry on that reform legislation when Congress started to insert new complexities into the tax laws. The end result was an Internal Revenue code that today is just as unfair and muddled as before. After Congress and the president get through with this year's tax "reform" bill, it will be even worse.

Fairness. Since the mid 1970s, the distribution of income in the United States has become increasingly uneven. 1997 was the first year the Congressional Budget Office developed comparative data on after-tax income. The following information was assembly by the Center on Budget and Policy Priorities.

The after-tax income for the bottom 20 percent of U.S. households declined 16 percent between 1977 and 1994 in real (inflation-adjusted) terms.

The after-tax income for next-to-bottom 20 percent fell by 8 percent in the same period.

The average income for the middle fifth declined by one percent.

Contrast the foregoing figures with the top 20 percent of the income scale for the same 1997-1994 time period. For that group, after-tax income increased by 25 percent after adjustment for inflation.

For the top five percent, the increase was 43 percent.

For the top one percent, the increase was 72 percent.

In light of such disparities, one might think that the pending tax legislation would focus on those who have fallen behind rather than those who sprinted ahead. Under the House bill, however, the bottom 80 percent of all taxpayers will either not receive a tax cut at all or will receive a tax cut that, on average, will be less than one percent of their after-tax income.

For the top one percent, the tax benefit will average $27,000, an increase of 6 percent of their already enhanced incomes. When the House bill is in full effect in the years ahead, 40 percent of all the tax reductions generated by the bill will go to the top one percent.

The pending legislation will not rectify the disparities in the current tax code. Rather, those disparities will be exacerbated.

Simplification. Remember the 1996 presidential campaign? Steve Forbes made an initial stab at simplification by advocating the flat tax. When he generated some early publicity, Bob Dole felt compelled to say he was for a "modified" flat tax. President Bill Clinton chimed in to give some lip service to the subject of tax simplification.

All of that 1996 tax rhetoric is forgotten now. The bottom line of this year's bill is complexity, tax reduction for the wealthy and special loopholes for the special interests. Whereas the 1986 reforms did away with many tax shelters, this year's bill will create hundreds of new ones. Moderate and lower income taxpayers will have to cope with intricacies that used to vex only the well-to-do.

There are many culprits responsible for these impending results. Only those with higher incomes can afford the campaign contributions and other costs of access to the lawmakers. A growing economy reduces any sense of urgency about the seemingly intractable problem of widening income disparities. A White House and a Congress controlled by different parties must complicate rather than simplify any reform proposal if a mutually acceptable compromise is to be reached. The only consideration given short shrift in all of this is the long-term interest of the country as a whole.

The president, the Republicans and some Democrats in Congress have joined hands to produce an awful tax bill that is neither fair nor simplified. Congress will rush to get the law passed before the August recess. The president seems to be ready to sign any tax reduction measure put on his desk. This will be a bill that only H&R Block can love.

~Tom Eagleton of St. Louis is a former U.S. senator from Missouri.