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A tax reform to run with: $5,000 per child, and other winning ideas.

Article Excerpt
THE Republican party is going through a rough patch right now. To the extent that it has a strategy for getting through it, the strategy does not involve promoting popular legislation. Republicans seem to be out of ideas, or at least ideas they think will work under the political circumstances of the moment.

Usually, when Republicans find themselves in political trouble, they turn to the tax issue. But the deficit is constraining them from doing that. They are finding it too hard to hold on to their past tax cuts to offer any large new ones.

Instead of cutting taxes, how about reforming them? The idea of reform is attractive. But if the tax reform can't also be a tax cut, then it has to involve raising some people's taxes in order to cut them for others.

There's another problem. Conservatives are unrealistic about tax reform. President Bush's commission on tax reform devised plans that would have scaled back deductions and made the tax code less biased against investment. Some of the commission's proposals were politically nave, others unimaginative. But conservative groups criticized the commission for other reasons: They thought it had not gone far enough toward a flat tax or national sales tax. Neither idea could possibly pass through Congress, or any Congress in the next ten years. If conservatives insist on something like the flat tax or no reform at all, the latter is what they are going to get.

The cause of conservative tax reform has to be rescued from conservative tax reformers. Republicans (and Democrats) can enact a popular tax reform that advances conservative objectives--although they might have to buck the conservative think tanks to do it.

THE PLAN

The centerpiece of the plan would be a massive expansion of the tax credit for children. Currently $1,000, it would grow to $5,000 per child. It would keep growing over time, tracking the growth in wages. It would be available to all parents no matter how much they earn, with the limit being the amount they pay in income and payroll taxes.

The second big feature of the plan would be to replace the standard deduction with a tax credit worth $1,500 for adult individuals and $3,000 for couples that can be used to offset income taxes. (These too would rise with wages.)

All itemized deductions, other than those for mortgage interest and charitable donations, would be scrapped. So would the tax credits for daycare...

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