Monday, January 08, 2007

not this amt

Sebastian Mallaby doesn't like the idea of getting rid of the Alternative Minimum Tax (AMT), saying it is progressive because 90% of its take is from people making over $100,000. Crunch the numbers further and I bet you find that the lower end of the $100,000+ club are paying disproportionately (as a share of THEIR income, which is the number that counts) compared to those making a million or much much more.

I wouldn't even mind keeping a revamped AMT. But when it was written in the late '60s, it was supposed to catch the very very rich, who were dodging taxes. As Mallaby writes, it hit 20,000 families in 1970, and probably 23 MILLION in 2006. But Congress having foolishly forgotten to index it for inflation, it is now catching people in the upper middle class -- and the very very rich, enjoying the benefits of their tax breaks and greater shelters, of course are finding ways around it anyway. Revise the AMT to return the limit to a higher income level and make it stick on the really rich. But don't leave it in place as a creeping tax hike on the moderately well-off.

As for the loss of revenue -- well, the Bush tax cuts for the rich have cost us far, far more than revising the AMT would. That's where the revenue loss has come. We shouldn't keep on soaking the moderately well-to-do in order to subsidize the very very rich.


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