Reading Bush's lips

New taxes are on the way. Where's the GOP outrage over these proposals?

WASHINGTON, Oct. 11 - President Bush's tax advisory commission indicated on Tuesday that it would not propose replacing the income tax with a national sales tax or a value-added tax, but would recommend limits in the popular tax deductions for mortgage interest and employer-provided health insurance.

The commission, scheduled to make its recommendations to the president by Nov. 1 on how to change the tax system, did not take votes or dwell on details, but its consensus on many important issues was clear.

They are curiously short on actual details, but it looks like one option is to limit the mortgage interest deduction, capping it at the amount the Fed Housing Administration will insure. But with a housing bubble going on in much of the country, frankly, $312,895 is not a particularly large mortgage. Currently, you can deduct all the interest on loans up to $1 million.

But an even greater hit on the middle class would be the proposal to put a ceiling on the amount employers can deduct for their employees' health insurance.

In the case of employer-paid health insurance, the main proposal the panel discussed would limit tax-free premium payments to the average cost of the premium the government pays for federal workers. That is now about $11,000 a year for family coverage.

Mr. Muris said he did not know how much revenue his plan would raise. The Congressional Budget Office calculated this year that a limit of $3,720 in tax-exempt premiums for an individual and $8,640 for a family policy would raise $706 billion over 10 years.

Under the current law, employers can deduct every penny they pay for health insurance for their workers, and the workers are not taxed on this benefit. The panel did not agree on whether the employers or employees would be taxed if a ceiling were imposed, but as a practical matter, there would probably be no difference.

The proposal the panel discussed would allow taxpayers whose employers did not provide health insurance to deduct the amount of the premiums they paid for themselves.

The main proponent of the health insurance proposal, Timothy J. Muris, a former chairman of the Federal Trade Commission and a law professor at George Mason University, said limitless tax-free health insurance premiums encouraged workers to demand and companies to offer overly generous insurance and resulted in increased health costs.

This has long been a popular theme among those who want to change the way in which healthcare is provided. The thinking is, if you limit the amount people are permitted to spend on health insurance, it will result in them using fewer healthcare resources.

It's called "Moral Hazard," and it is simply insane. This is not like auto insurance, where companies try to limit the riskiness of their drivers by raising rates on their riskiest drivers. People don't go to the doctor simply because they can. They go when they need to.

All of this, so they can eliminate Paris Hilton's AMT.