Bill Clinton's AMT Bomb
Why millions in the middle class may see their tax bill explode.
OpinionJournal.com
As tax season nears, Democrats in Congress are discovering they have an urgent political bomb to defuse--the alternative minimum tax. The AMT already hits four million Americans, and without new legislation this year it will explode in the pocketbooks of 23 million taxpayers come April 15, 2008.
What's amazing is that many Democrats and reporters are trying to blame this looming tax increase on the 2001-2003 tax cuts. See if you can follow their argument: Taxpayers are obliged to pay the higher of their tax bill under either the regular IRS code or the AMT. And because the tax cuts reduced the regular income tax of the average family by $2,000 a year, more middle-class families are being bounced to the AMT system. Ergo, it's all President Bush's fault.
This logic requires overlooking that a taxpayer's bill under the AMT is still lower than it would have been without the tax cuts. But never mind: The political game here is to use the AMT as an excuse to justify repealing the Bush tax cuts.
OpinionJournal.com
As tax season nears, Democrats in Congress are discovering they have an urgent political bomb to defuse--the alternative minimum tax. The AMT already hits four million Americans, and without new legislation this year it will explode in the pocketbooks of 23 million taxpayers come April 15, 2008.
What's amazing is that many Democrats and reporters are trying to blame this looming tax increase on the 2001-2003 tax cuts. See if you can follow their argument: Taxpayers are obliged to pay the higher of their tax bill under either the regular IRS code or the AMT. And because the tax cuts reduced the regular income tax of the average family by $2,000 a year, more middle-class families are being bounced to the AMT system. Ergo, it's all President Bush's fault.
This logic requires overlooking that a taxpayer's bill under the AMT is still lower than it would have been without the tax cuts. But never mind: The political game here is to use the AMT as an excuse to justify repealing the Bush tax cuts.
posted by Andy W. Rogers | 7:13 PM
1 Comments:
Would be curious to know whether you're citing the WSJ editorial here approvingly or not.
I would hope the answer is "not," since it's a silly editorial that relies mainly on people not remembering what actually happened back in 2001. Bush's economic policy team knew exactly what they were doing when they chose to drop the top tax rates without simultaneously dropping the AMT rates. They were confronted on this question at the time and explicitly said they weren't going to do anything about the AMT-- and thereby set the upper-middle class on a collision course with the AMT. I would classify the WSJ editorial as a meaningless exercise in spin.
Now, Congress is to blame too. After the AMT exemptions were last increased in 1993,Congress did nothing to fix the AMT problem, which was gradually becoming a little bit worse each year until Bush's tax cuts made things a LOT worse.
But the magnitude of the current AMT jam is so transparently Bush's fault, and so obviously a product of the Bush team's intentional policy choices. that it takes an incredible amount of chutzpah to deny it.
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