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Tax policy will be one of the most difficult tests for the next administration. This will be true whether Barack Obama or John McCain leads it. They have sharply opposed positions on the issue, so you might think an intense debate on the subject would already be joined. Not so far: At the moment, neither has a policy worth defending.

Both have made the fate of the Bush administration's tax cuts, due to start unwinding in 2010, the main thing. This makes their disagreement blinkered, needlessly heated, and pointless. There is more to fixing the country's broken tax system than deciding whether you are for or against this president.

McCain originally opposed the Bush cuts--he said they were unfair and would add to the budget deficit, and he was right on both points. Now he promises to make the cuts permanent, for no reason, it seems, except that he is against tax increases under any and all circumstances, including when they cancel cuts that were wrong. This intriguingly asymmetric concept--that certain kinds of tax cuts are unfair and harmful until they have taken place, at which point they become welcome and necessary--is not something I would look forward to explaining if I were writing speeches for McCain's campaign.

McCain does have some other tax ideas. His main innovation on health care is a tax policy change. He proposes to give all workers a refundable tax credit ($2,500 for individuals and $5,000 for couples) to set against the cost of health insurance, neutralizing the tax advantage that employer-provided insurance currently enjoys over individually purchased plans. It falls way short of Obama's much more ambitious ideas; as far as tax policy goes, however, you could call this thinking big. The trouble is, it does not fit into a broader scheme to improve and simplify the system. Tax policy in the round has not been thought through by the McCain team.

Obama's tax policy is half-baked, too. He will let the Bush tax cuts expire for the rich, he explains. "Rich" means households making more than $200,000 (or maybe $250,000: "It depends how you calculate it," he says). But then he also intends to raise (or eliminate; again it is not entirely clear) the earnings ceiling on the payroll tax. On the face of it, this would raise the marginal tax rate for workers making more than $100,000 by a mighty 12 percentage points. That is the figure if you include employer as well as employee deductions. (It is right to count them both, because in the end workers pay it all, either directly or in the form of lower wages.)

Obama talks as well about providing payroll tax relief to workers with the lowest incomes, maybe with a refundable credit. Good idea. Currently, there is no personal exemption for Social Security. Deductions start with the first dollar of income, making this one of the more regressive elements in the tax code. Even so, many taxpayers in the $100,000 to $200,000 bracket--which Obama promises will not be taxed more than at present, and maybe less--actually face a big increase in taxes on their earnings under his proposals, as long as you include Social Security deductions as well as the federal income tax.

So you have muddle on both sides. The greatest pity is that neither candidate is using the sunset of the Bush tax cuts as a chance to push for something more comprehensive and considered. A complete overhaul is needed. It is needed so badly, in fact, that it may be unavoidable. The next administration--or Congress, if the White House ducks the challenge--may have to become an adventurous tax reformer whether it likes it or not.

This is for two reasons. First, because extra revenues are going to be required even to balance the books at current outlays--to say nothing of the additional spending that both presumptive presidential nominees (Obama especially) are calling for. Second, because the current tax structure is ill-suited to carry a big extra burden. A simple precept of good tax design is that the base to which the tax applies should be broad, so that you can levy correspondingly moderate rates. The narrower the base, the higher you have to push rates to raise a given amount--and the more harm you do to the incentives to work and invest.

Income-tax rates are moderate in the United States by international standards, but the income-tax base is narrow, so the total raised is less than you would expect. Raising significant amounts of additional revenue--which is going to be necessary, even if no new spending is undertaken--would push income-tax rates quite high. The country needs to broaden its tax base and simplify the rate structure, and much the best way to do this is as part of a thorough overhaul of the code.

A lot of what should be done is neither liberal nor conservative. Ordinarily one thinks of a trade-off between equity and efficiency. At some point, those choices do have to be made, but the United States is not at that point. The current system is so inept, so complicated, and so replete with unintended consequences that it is easy to devise a win-win alternative--fairer and more conducive to growth at the same time. Yet neither Obama nor McCain gives any sign of embracing comprehensive reform. Quarreling over the fiscal legacy of the Bush administration is more to their liking. So much for post-partisan politics.

If this should change, a quick read I would recommend to any incoming president is "Fixing the Tax System: Support Fairer, Simpler, and More Adequate Taxation," an 11-page paper by William Gale of the Brookings Institution. (You can Google it.) Gale's proposals, taken together, are not scarily radical. If I were in charge, I would go for something more dramatic. But they show how the current system could be greatly improved without tearing things up and starting over. If politics is the art of the possible, this is what intelligent tax reform could look like.

Gale suggests integrating payroll and income taxes, so that labor income is "taxed once and once only." Merge the two taxes, providing extra relief at the bottom with a refundable credit, and make good the revenue loss with an across-the-board increase in rates. Further simplify the system by pruning income-tax deductions--the classic base-broadening approach--which would allow an offsetting across-the-board cut in rates. For instance, Gale says, convert the mortgage interest deduction to a refundable first-time homebuyers' tax credit. "This would generate revenue, improve homeownership rates, and eliminate incentives to buy ever-bigger houses with ever-bigger mortgages," he notes. Given the state of the housing market, right now is not the best time to do this--but by 2010 it deserves serious consideration.

Taxation of capital income also needs to be reformed. The current system is insanely complex. The effective rate of taxation varies enormously from investment to investment, and for no intelligible reason--merely as a byproduct of the tax code's convolutions. Gale again advocates the principle of taxing once, and once only. At the moment, he says, about a quarter of all profits are taxed at both the corporate and individual level; about a quarter at the corporate level but not at the individual; about a quarter at the individual level but not at the corporate; and about a quarter not at all.

Capital income should be taxed once, he says, at the full rate of individual income tax. For new investments, individual taxes on dividends and capital gains should be paid at the ordinary rate (not at a lower rate, as now) unless the profits have already been fully taxed at the corporate level. In addition, Gale calls for "a wholesale attack on corporate subsidies."

With all of these changes in place, the government could collect the current level of revenue more fairly and with far less waste. And the system could be used to collect more revenue in the future without wrecking the economy. Serious tax reformers need to keep other sources of revenues in mind as well. A carbon tax is the most efficient way to curb emissions of greenhouse gases; the proceeds could provide payroll-tax relief. And if the United States is to take a big step in the direction of European social provision--I am thinking of universal health care--then in the end it will have to take a big step toward European forms and levels of taxation. A value-added tax--a kind of national sales tax--may be in America's future, and needs to be debated right now.

Of course, it will not be. Nor, I'm willing to bet, will most of these other ideas. Not yet anyway. Between now and the election, the phony quarrel over the Bush tax cuts works fine for both candidates. Next year, or soon after, the real world will come calling.