WASHINGTON – Setting the stage for a showdown over the structure and principles of American taxation, President Bush’s advisory panel on tax reform presented its final report to Treasury Secretary Snow yesterday, immediately generating opposition from both sides of the aisle.

Yesterday’s presentation concluded 10 months of work by the bipartisan, nine-member panel, headed by a former Republican senator from Florida, Connie Mack, and a former Democratic senator from Louisiana, John Breaux. The Mack-Breaux commission indicated last month what shape its recommendations might take, and many of those suggestions were preserved in the final report – a 273-page document handed by Messrs. Mack and Breaux to Mr. Snow yesterday in the Diplomatic Reception Room of the Treasury Department.

The report put forth two reform proposals, the “Simplified Income Tax Plan” and the “Growth and Investment Tax Plan.” The suggested alterations that prompted the most outrage yesterday were those abolishing the federal deduction for state and local income taxes and limiting the deduction for home mortgages.

Mr. Breaux said yesterday that these limitations were necessary to offset the $1.3 billion lost with the abolition of the unpopular alternative minimum tax. One of the conditions set by President Bush was that the reform proposals be revenue-neutral, on the assumption that the tax cuts enacted by the president are permanent.

Under both of the commission’s proposals, the basic structure of America’s income-tax system would remain the same, yet with modifications to nearly every category of deduction and exemption. Both plans retain a progressive tax structure, but reduce the number of income tax brackets and flatten rates. Under the current code, Americans are divided into six income-tax brackets, with the highest rate set at 35%. The Simplified Income Tax Plan streamlines the system to four brackets, with the highest rate lowered to 33%.The Growth and Investment Tax Plan has only three brackets, taxed at 15%, 25%, and 35%.

Corporate tax rates, too, flatten under both plans. The current eight-bracket system for large businesses, with the highest rate set at 39%, is reduced to a single rate under both plans, set at 31.5% for the Simplified Income Tax Plan and 30% under the Growth and Investment Tax Plan.

Income from investments is spared much of the current tax burden under the Mack-Breaux commission’s official recommendations. Under the Simplified Income Tax Plan, 100% of dividends paid out of American companies’ domestic earnings are tax-exempt, as are 75% of corporate capital gains from American companies. Capital gains subject to a levy would be taxed at rates ranging from 3.75% to 8.25%.

The tax commission’s proposals also consolidate tax-preferred savings accounts into three savings plans, and streamline a host of credits and exemptions. The standard deduction, personal exemption, and child tax credit are recast as a single “Family Credit” available to all taxpayers, including those who do not itemize their deductions.

Secretary Snow said yesterday that the panel’s report was a “starting place” for the Treasury Department, which, he said, will conduct an extensive review of the proposals before issuing its own recommendations to President Bush. Secretary Snow said he hoped the task would be completed before January.

Mr. Mack, speaking with reporters after yesterday’s presentation, said the commission had timed its report so that President Bush could make reform a “centerpiece” of his January State of the Union Address.

The editor of the Rothenberg Political Report, Stuart Rothenberg, however, said it was unlikely President Bush would be able to advance his tax-reform agenda. The president’s record low approval ratings, combined with a Republican party divided over the issue, boded ill for Mr. Bush’s using tax reform as an issue to rebound on, Mr. Rothenberg said.

Senator DeMint, a Republican of South Carolina, told The New York Sun he thought Republicans had a “50-50 chance of making it a major issue” next year. Mr. DeMint, who last week introduced legislation that would replace the current income tax code with an 8.5% federal sales tax and an 8.5% business transfer tax, said Republicans needed to embrace bolder reform proposals than those put forth by the commission.

The sentiment was shared yesterday by the vice president and chief economist of the Free Enterprise Fund, Lawrence Hunter, who said that, among those in the free-market, reform-minded community, “The one single word that describes everybody’s feeling about this is ‘disappointment.'” Mr. Hunter, who is forming a group of tax scholars and economists to devise an alternative set of proposals for the president’s consideration, faulted the report for shying away from a flat tax or a consumption tax.

The tax-reform panel had considered and mentioned a “progressive consumption tax” in earlier meetings, but said yesterday that it was “unable to reach a consensus to include it as a recommendation,” and that it had also considered, then scrapped, proposals incorporating a value-added tax and national retail sales tax.

Most of the political backlash over the Mack-Breaux commission’s proposals stemmed from the elimination of the state and local income tax deduction, a particular burden for high tax states like New York. Rep. Vito Fossella, a Republican of Staten Island, pledged to fight the proposals yesterday, calling the panel’s report “a non-starter.”

He was joined in denouncing the proposals’ effects on New York by Democratic Senators Clinton and Schumer. Mr. Schumer said implementing the tax panel’s recommendations would be met with “a giant sucking sound” as individuals and businesses fled to lower-tax jurisdictions, adding: “This is so dangerous to New York, fighting this proposal is my no. 1 priority on the Senate Finance Committee.”

The Finance Committee has jurisdiction over tax measures, and would have to approve any of the panel’s recommendations in order for them to become law. Senator Kerry, a Democrat of Massachusetts, and Senator Wyden, a Democrat of Oregon, also sit on the committee, and delivered withering attacks on the panel’s report.

The Committee’s ranking Democrat, Senator Baucus, of Montana, said the report “will not satisfy our hunger for reform and simplification,” adding that “some of the ideas here are not only a heavy lift politically, but also they may not make good tax policy.” Mr. Baucus and the finance committee’s chairman, Senator Grassley, a Republican of Iowa, said yesterday that they plan to hold hearings into the proposals as soon as possible.

The ranking member of the House Ways and Means Committee, Charles Rangel, a Democrat of New York, said he didn’t expect the proposals to make it to Congress. The Ways and Means Committee also has jurisdiction over tax legislation.

“This is dead on arrival,” Mr. Rangel told the Sun.

Mr. Mack, however, told the Sun yesterday that while such complaints about the recommendations were “politically expedient,” they were “short-sighted,” and urged members of Congress to consider the report in its totality.