The $70 billion tax cut legislation President Bush plans to sign today has been called many things: a jolt of economic stimulus, a contributor to runaway deficits, and a generous reward to wealthy taxpayers.

I t is all of those things, but principally it is the latest — and perhaps finest — example of the perpetual motion machine that passes for tax policy in Congress and the Bush administration: making the tax code ever more complex and easier for those with squadrons of tax lawyers to exploit.

In each year since Bush took office, he has signed at least one significant modification to the tax code. Each has been much ballyhooed by the White House and congressional Republicans. Each has been larded with tax breaks for favored industries. And each has left significant issues unresolved — so that Congress has to repeat the process in subsequent years.

The latest legislation, touted mostly for extending the 15% tax rate for dividends and capital gains for two more years, would save the average taxpayer making $50,000 to $75,000 a year about $112, according to the non-partisan Tax Policy Center. Those making more than $1 million would get tax cuts exceeding $42,000.

The bill also contains breaks for General Electric, Citigroup and other non-needy companies. (The extraneous provisions grew so numerous that a second bill containing the out-takes is being considered separately.)

The measure to be signed today was considered a "must pass" bill because of the alternative minimum tax. The AMT was designed to ensure that the very wealthy pay some taxes. It now ensnares about 3 million taxpayers and would have hit an additional 15 million this year without action. Rather than fix the problem permanently, Congress passed a one-year "patch" — guaranteeing another must-pass bill next year.

This approach to tax policy makes life difficult for people trying to make long-range plans. If you don't know whether you'll be paying the AMT, or whether the rate on your investment income will be 15% or as high as 38.6%, it's virtually impossible to make informed decisions about retirement, financing college tuition and other important matters. It also makes for a more hair-raising April 15 as the tax code has grown ever more complex with each change in the law.

While the code's complexity and instability can make you miserable, it's a beautiful thing for entrenched lawmakers. It allows them to:

• Shake down the K Street lobbyists, by sending a message that at virtually any time the industries they represent can be either rewarded or punished. A 2004 tax bill — which rewarded Home Depot and Oldsmobile dealers, among others, while punishing the film industry — was the most egregious example.
• Make dubious claims, such as that Bush has "cut taxes every year" he has been in office. In fact, individual tax rates have not dropped in any appreciable sense since 2001. Subsequent bills have principally sped up the dates at which lower rates would go into effect or pushed back the dates at which they would elapse.

As for the merits of this year's tax bill, one word expresses it best: irresponsible. At a time when Bush and Congress are accelerating government spending, lower rates for upper-income taxpayers have pushed tax receipts as a percentage of the economy below 18% for five years in a row. That hasn't happened since the 1960s.

As a result, the government is running annual deficits exceeding $300 billion just as it is about to face perhaps its most serious financial crisis ever, as baby boomers start collecting Medicare and Social Security benefits.

Though a measure costing $70 billion over five years is not as big as some of Bush's earlier tax cuts, it includes a number of gimmicks to lowball its cost. One is a provision that will allow wealthy people to convert traditional IRAs, which allow tax-free deposits, to Roth IRAs, which allow tax-free withdrawals. This will generate revenue over the next five years because such conversions trigger tax payments. But, over time, the government will lose out on the taxes that traditional IRAs generate at retirement. It's also an indicator that the Republicans know future Congresses will have to pay for their irresponsibility. The only reason to convert an IRA is if you think tax rates will rise.

Nor does the centerpiece of Bush's tax policy — rates of just 15% on dividends and capital gains — passes the fairness test. Most middle-class American wage earners pay higher taxes on the fruits of their hard work than is paid by those fortunate enough to have substantial investment income.

In short, this bill is bad policy in motion. It is time to adopt taxes that are fair, sensible — and stable enough to allow average taxpayers to make plans.