One of the most high-profile stock market analysts, LizAnn Sonders, who is Charles Schwab’s New York-based chief investment strategist, is both the only New Yorker and the only Wall Street professional appointed to President Bush’s Advisory Panel on Federal Tax Reform. The tax commission’s report is due July 31. She spoke the other day with The New York Sun’s Roderick Boyd.

Q. How did a market strategist from New York wind up trying to change the tax code?

A. I was invited down by the administration in April of 2003, along with other strategists and economists, to discuss economic issues, especially deficit spending, with Treasury Secretary Snow. I guess I caught their attention. I was invited back down on a couple of other occasions and met with the president. I guess they liked what I had to say.

And that was …

Initially I had been very vocal about the need to reduce or eliminate the capital-gains tax and taxes on dividends, as I had been since the late 1990s. I am not really partisan politically and I don’t look at issues that way, but when it comes to being either in the Paul Krugman or Larry Kudlow spheres, I come down firmly in the Kudlow pro-growth, less-taxes arena. I made that clear to the administration.

Where does the commission stand now in terms of actually completing its work? And will it be done on time?

I’m totally confident this will be done on time. No one on the commission or the staff is worried about that. We are about 50% of the way there in respect to completion, having wrapped up what I guess you could call the information-gathering phase last week in Washington. Now we just have to put the proposals together.

Can you – the commission – propose whatever you wish?

Basically, yes. We have had three limits placed on us by the administration. The first is that we have to come up with something that is revenue-neutral and assumes the permanence of the tax cuts passed in 2001. The second is that any proposals have to take into account the government’s long-standing disposition toward charity and home-ownership, meaning that the interest and charitable deductions remain in place. The last is that at least one reform plan should assume that the current tax code stays in place. That’s it. I have to say that I view it as only two rules, since none of us were going to touch the home and charity deductions. Everything else is on the table.

Characterize one thing that captures the sentiment of the commission after six meetings?

We are unanimous that the tax system is much, much more screwed up than we thought. There aren’t really divisions on this. We’ve all been able to step back from our perches and our jobs and see what this is doing to business growth in America. I could go on and on about things that really stunned me.

Name a few.

The nine of us don’t do our own taxes. Remember, I’m a finance professional and there are three tax professors on the panel. It’s too complicated, there’s too much that can go wrong, and a mistake could be very costly. What’s worse is that the 1986 tax reform law has had 14,000 amendments tacked on, so no matter what, no one can keep up with the law.

Now take that out into the larger realm of corporate finances, where the complexity and cost of tax preparation alone, to say nothing of tax levels, is clearly hurting business profits. In turn, I would argue that this discourages job and wage growth. But I didn’t have to argue it, since the president of Intel, Paul Ottelini, made the case to us. He said that semiconductor plants in places like China and Ireland are about $1 billion cheaper to build and run than ones in America. The biggest factor in that $1 billion is taxes. We grilled him on that, asking him if it wasn’t really wages and all the issues related to outsourcing. He held his ground and insisted it was mostly taxes. That resonates with me, since everyone in the capital markets looks to tech to lead the economy in this century.

Another surprise is that the media has not really picked up on it. I would have thought that would have provoked some concern among the likes of Lou Dobbs, who have placed the blame for job loss at the feet of the private sector. Ottelini’s testimony could change that debate now.

The question has to be asked: The federal government has hundreds of “blue-ribbon” panels and commissions each year, and a lot of the recommendations are politely ignored. So what sets this apart?

This was my fear, too. Unlike most panels though, this one was set up to be relevant in 18 years by not solving a short-term problem specific to today. We aren’t examining energy prices here.

Another thing we have going for us is that there is wide bipartisan support for this, mostly because no one disagrees that there is a problem. This isn’t the case on Social Security reform, for example, where some people argue that a problem doesn’t exist. The executive director of the staff, Jeff Kupfer, who has deep congressional connections, told us that he can’t find anywhere on either side of the aisle where there is an argument for preserving the tax code as is.

What about Bush administration support? Have you ever felt this was just political cover?

No, they are very serious. The administration’s critics and the media have understated or have missed just how big this is to the Bush administration. The desire to change the tax code stems from the president himself, followed closely by Secretary Snow. People are distracted right now, but when we release our report, both Washington and Wall Street will take notice.

What have you taken away from your time on the commission?

That people pay all the taxes. This notion that there is a distinction between personal and corporate taxes is ridiculous. Every dollar we take from corporations in taxes is a dollar that is not spent in reinvestment, wages, or helping equity growth. That hurts people.