Crack the code

President Obama’s task force on taxes is focused on rooting out corporate welfare and eliminating tax havens.

This is understandable given public anger with corporate excess, billion-dollar bailouts and continued fears about jobs moving overseas.

Still, the main goal of any presidential task force on taxes should be to simplify a code too complicated to understand without an expensive accountant or computer program.

Besides looking for ways to close corporate tax havens in the Bahamas, we hope the task force makes serious recommendations for streamlining the code.

Everyone knows it needs reform and simplification, but the problem is underlined by the tax headaches of several Obama Cabinet members and nominees.

Not all of these errors will attract the sympathy of the average taxpayer. Former Senate Majority Leader Tom Daschle’s (D-S.D.) nomination was jettisoned because of his failure to pay taxes on a car and driver that were provided to him. Few people have that tax complication.

But some of the problems encountered by fellow nominees Ron Kirk and Kathleen Sebelius are more run-of-the-mill.

Kirk, confirmed as U.S. Trade Representative, failed to report speaking fees that he donated to his college alma mater. He also deducted more basketball tickets as business expenses than he should have. Overall, he had to pay a little more than $10,000 on tax arrears after a thorough review by Senate Finance Committee investigators.

Some Senate Republicans came to his defense; Finance panel ranking member Sen. Chuck Grassley (Iowa) said Kirk was not purposefully trying to avoid taxes.

Kansas Gov. Sebelius, Obama’s Health and Human Services secretary-designate, paid more than $7,000 in back taxes and interest. Her tax problems were related to the sale of a house, business expenses and donations to charity, all provisions of which the average taxpayer could run afoul.

Obama’s task force is to report to former Federal Reserve Chairman Paul Volcker with its recommendations by Dec. 4. This could set up a major year of tax reform in 2010, although it could be difficult to eliminate too many loopholes legislatively in an election year.

On the other hand, the last great tax reform happened in 1986, another congressional election year. Congress in that reform package reduced individual tax rates, paying for them by eliminating corporate loopholes.

The changes seem astonishing in hindsight. Before the reform, there were 15 different tax brackets. Afterward there were four. The top tax rate dropped from 50 percent to 28 percent, while the bottom rate rose from 11 percent to 15 percent, according to the Washington-based Tax Foundation. Congress at the time was run by Democrats, and the reform was signed into law by President Reagan.

It’s probably too much to ask for reforms on that level in 2010, but the example of 1986 shows it is possible. The first step is for task force members to take simplification as their motto.

It’s called a tax code. But it should not be in cipher.