Oh, What a Tangled Tax Web

The legislative details in the voluminous deficit-reduction plan that is before President Bush provide a continuing voyage of discovery. Only now, as its more than 1,000 pages of provisions come to be scrutinized, is the public--to say nothing of the Congress that pondered and passed this measure--getting a real chance to appreciate what has been wrought.

Congressional tax-writers and outside observers agree that the special-interest benefits sprinkled throughout the bill don’t approach the level of favoritism contained in the 1986 tax act, which by common consent set a new record for shamelessly awarding specific goodies to revered constituents and contributors. Still, in that regard the new bill isn’t half bad.

The bill aims to cut $490 billion from projected budget deficits over the next five years, partly by levying about $137 billion in new taxes. What will be taxed is naturally of great interest. So is what will escape new taxation.

Oregon’s wineries, to take just a single example. Sen. Bob Packwood, the ranking Republican on the Senate Finance Committee from guess- what-state, won an exemption for the tax increase on wine--it’s scheduled to go from 3 cents a bottle to 21 cents--for wineries producing fewer than 150,000 gallons a year, and a partial exemption for those producing under 250,000 gallons annually. The cost to the Treasury will be $500 million. As it happens--why are we not surprised?--all 85 of Oregon’s wineries fall under the exemptions. In fairness, so do about 600 California wineries. But those enterprises account for only 3% of this state’s wine output; the Oregon wineries, for 100%. Advantage: Oregon.

There’s nothing horrifyingly new about any of this. Tax bills always come loaded with provisions to benefit both obscure and well-known special interests. What is disturbing, now as always, is the generally unpublicized--call it sneaky--way so many of these favors are dropped into complex measures, with no public hearings or informed debate or any chance for dispassionate examination. A hundred million here, $500 million there, pretty soon it adds up to quite a bundle. But it’s not the way to cut deficits, or to make tax policy.