In his State of the Union address, President George W. Bush said we currently have an "archaic and incoherent tax code" and said he planned to make it fair to all and easier to understand. He also wants to encourage savings and investments and compete more effectively on the international front. He appointed a bipartisan advisory panel to study reform options and report its recommendations on July 31.

Those proposals must be revenue neutral and take into account the importance of home ownership and charitable giving. One option must be a complete overhaul of the current system. Other possibilities include incremental tax reform and adding a new consumption-based tax. Another proposal bandied about calls for a national retail sales tax that would replace the current income, payroll, estate and gift taxes. Panel members thought the retail tax approach is not likely to win approval.

"This is on the president's agenda," added Mark Garay, director of tax policy services of Deloitte Tax LLP. "It's clearly on the Capitol Hill agenda for 2006."