The President's Advisory Panel on Tax Reform met last week, for the first time since Hurricanes Katrina and Rita ravaged the Gulf Coast, and again today, in preparation for making their recommendations for tax reform to the Treasury Department before the Nov. 1 deadline. During the two meeitngs, the panel referenced some loose conclusions it has reached on tax reform, mainly with regard to the alternative minimum tax, and to scrapping deductions for homeownership, employer-provided health insurance, and state and local taxes. Although it has held public meetings since February, until last week the panel had not publicly discussed specifics of the reforms it is pursuing. As was discussed during the two meetings, however, the group has come to a consensus on capping the employee income exclusion for employer provided health care (at $11,000 per employee), and the mortgage interest deduction for homeowners (at $350,000 for a jointly filing couple), as well as eliminating the deductibility of state and local income taxes. Each of those proposals are controversial and will be difficult to garner support for, particularly in New York, Maine, and other states with high income taxes. Former GOP Senator and Panel Chairman Connie Mack said the deductions as they currently exist are not shared equally, and that pursuing caps in both areas would result in "shifting some of the benefit to middle-income Americans." The panel is pursuing these controversial reforms, as supports for the implementation of another central goal of the panel: repeal of the Alternative Minimum Tax (AMT). The decreased deductions would help to offset the cost of repealing the AMT, which was created to ensure that all extremely wealthy individuals pay some taxes but increasingly ensnares middle-income Americans. AMT repeal was deemed a necessary reform by the panel months ago; however; it was only with last week's meeting that the panel laid out options for offsetting the cost of repeal, which is estimated at $11.3 trillion over ten years. Besides AMT repeal, the panel focused on tax deductions for charitable donation and appeared willing to consider expanding incentives to individuals who do not currently itemize their tax returns, a controversial provision not widely supported by career staff at the Treasury Department. In addition, the panel rejected replacing the income tax with a sales tax or a value added tax, both of which would unnecessarily complicate the tax code and place a disproportionate financial burden on low-income families. Panelists will meet for a final time via teleconference before submitting their recommendations to the Treasury Department. Those recommendations will then be incorporated into the recommendations Treasury Secretary John Snow will make to the president. President Bush will likely discuss some of the panel's tax reform suggestions in his upcoming State of the Union address in January, when it is expected he will outline a plan for a broad overhaul of the tax code, similar to his call to overhaul Social Security in last year's address. Given the administration's unbalanced and regressive tax policies over the last five years, it is likely Bush will ignore the panel's more balanced and progressive proposals. In addition, it is unclear whether certain tax reform proposals can be implemented in 2006, when the political pressures of an election year will warp much of the policy deliberation.