FAIRFAX, Va., Jan. 5 (UPI) -- With so much attention focused on what President George W. Bush proposed in the way of economic reform in his Tuesday speech to The Economic Club of Chicago, the administration has a rare and promising opportunity to help America's struggling families today and for generations to come.

A 2-year window of political opportunity exists to promote fundamental tax reform that will substantially reduce taxes on working families and dramatically simplify America's Byzantine tax system.

With the prospects for significant tax reform -- and his own political clout -- buoyed by the November 2002 election, the president is expected to spend the next couple of years rallying support for the cause of dramatically altering America's progressive income tax.

That's good news for working families who pay a high price for America's behemoth tax code.

The progressive income tax applies higher marginal tax rates to people earning more. It is a selective law that levies an additional penalty on people who do well-- and it backfires badly.

Middle-class Americans were originally exempt from the income tax. First introduced as a tax on just "the rich" -- the wealthiest 1 percent of Americans -- the average two-earner family today pays more than $6,000 just in federal income taxes.

Once the tax was put in place, under the guise of "soaking the rich," it was very easy to broaden it. Now nearly everybody pays.

The government's demand for revenue during World War II provided the rationale for expansion from a class-based tax to a mass tax. Once it had begun milking the middle class, the government was loath to stop.

That's only the beginning. Progressive taxes actually make it harder for middle-class workers to find jobs in the first place. Progressive taxes discourage productivity and inhibit economic growth -- which translates into fewer available jobs for workers.

Fewer available jobs mean lower wages for those who find and keep work. Wages are highest when many employers have to compete for few workers; they are lowest when many workers have to compete for few jobs. In this setting, lower- and middle-class families suffer the most.

Though the highest marginal rates are imposed upon the most productive Americans in terms of the income they generate the real costs -- fewer jobs, lower wages, slower growth -- hit working families the hardest.

America's progressive tax policy is also morally destructive.

Progressive taxation casts suspicion on the virtuous behavior that creates wealth and is a kind of fine on prosperity. Government seizes a greater share of the fruits of the labor of hard-working, honest citizens who have prospered against the odds then their neighbors who may have not. In so doing, it stigmatizes prosperity and the virtues that produce it.

Prosperity brings less tangible benefits, such as greater freedom from worry, the trust and confidence of others, and self-respect. Virtues become habits when practiced regularly, building healthy families, healthy communities and healthy nations.

A nation that treats the fruits of virtuous behavior as sinister is a nation in moral peril because it lures its citizens toward the practice of vice rather than virtue. The resulting social-down-spiral creates greater dependency on government by infantilizing the citizenry, teaching people that they can't make it on their own without a government handicap.

With a new Congress heading into session and new economic leadership taking office shortly, the president now has a golden opportunity to reshape America's tax policy and undo the damage that the mistakes of the past century have wrought.

In the coming State of the Union address, Bush should ask the Congress and the country what kind of America tax policy should support. Should it forge a nation that honors the virtues that create wealth to everyone's benefit or one that punishes creative and responsible economic behavior and ends up hurting those who can least afford it? By adopting the right vision, the Bush economic team can remodel America's tax code into one that will strengthen -- not undermine -- the nation's moral and economic fiber.

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Leslie Carbone, former director of family tax policy at Family Research Council, is the author of Slaying Leviathan: The Moral Case for Tax Reform (forthcoming).

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"Outside View" commentaries are written for UPI by outside writers who specialize in a variety of important global issues.