The Congressional Research Service has released The Advisory Panel’s Tax Reform Proposals (RL33545) (7/13/06) (40 pages).  Here is the Conclusion:

Of the two proposals presented by the panel, the income tax revision may be more likely to have any chance of ultimate adoption. The consumption tax has gains in efficiency (through the allocation of capital), possibly some gains in growth (although the analysis in this report suggests these effects may be modest), and some significant gains in simplicity, especially for business, that exceed those of the income tax proposal. However, the analysis presented in the last section suggests that the progressive consumption tax proposed by the panel would be very difficult to implement. Moreover, the consumption tax is likely, when appropriate distributional analysis is considered, to significantly reduce the progressivity of the federal tax system.

These observations suggest a focus on the income tax proposal (SIT). There are some important simplifications in the SIT, especially for businesses and high-income individuals, although lower-income taxpayers may find their affairs more complicated. In translating the income tax plan to a more detailed proposal that deals with small, but important, deductions, however, some of these simplification gains may be lost. The SIT faces revenue sufficiency problems that will require some taxes to be increased in the future, and is probably not entirely distributionally neutral, but shifts some of the burden away from high-income taxpayers. There are efficiency gains in a number of areas, although probably little effect on growth, and the change to international tax may increase inefficiency and even exacerbate tax sheltering. There are also some transition problems, but they are small compared to the consumption proposal.

Whether the gains from the changes under the SIT are worth the costs is unclear. Historically, it has been difficult to make major changes to the tax code because of the disruption in taxpayers’ affairs. Nevertheless, there are some limited aspects of the proposals that do seem to have many advantages and few drawbacks. The proposal for a floor on charitable deductions has a salutary effect on both target efficiency and tax administration and simplification. Removing barriers to automatic enrollment in employer retirement plans is, as well, a proposal that is likely to facilitate savings. A ceiling on deductions by employers in health insurance plans appears to preserve the benefits of reduced adverse selection in health insurance markets while reducing both moral hazard effects and differential treatment of taxpayers. It may be that the greatest contribution of the panel study is to identify some possibilities for more limited reforms.