With all the grousing about the AMT (Alternative Minimum Tax) and the plans to ?¢‚Ǩ?ìdo something?¢‚Ǩ¬ù about it, the following factors must be considered. Charles Rangel, Democratic Chairman of the House Ways and Means Committee?¢‚Ǩ‚Ñ¢s plan is to raise taxes (don?¢‚Ǩ‚Ñ¢t worry, you won?¢‚Ǩ‚Ñ¢t be left out) elsewhere to ?¢‚Ǩ?ìpay for?¢‚Ǩ¬ù reducing the AMT. First, Charles, you don?¢‚Ǩ‚Ñ¢t have to borrow money to ?¢‚Ǩ?ìpay for?¢‚Ǩ¬ù a tax cut. You borrow money to spend. Everything else is just dissembling and an attempt to confuse people. Power-hungry politicians love to use words like that because they don?¢‚Ǩ‚Ñ¢t want you to think about the fact that it is your money, not Charles Rangel?¢‚Ǩ‚Ñ¢s.
The AMT was created by the Democratic Congress 1969 and became effective in 1970, after being signed by President Nixon. It was intended to collect taxes from approximately 155 households who under the then-current law were not required to pay taxes. Let’s be perfectly clear, everything they were doing was completely legal.
In 2007, estimates are that 20 million people will be impacted by the AMT. Now it is all about votes. The lesson to be learned here is that as long as a minority is small enough and unpopular enough, then anything goes. 155 people, no problem. 20 million votes, err, people, big problem. For the Democratic party, it is perfectly acceptable to go after a particular minority if they are small enough. Just remember the smallest minority is a minority of one ?¢‚Ǩ‚Äú you, an individual. And if you are on the wrong side of the ?¢‚Ǩ?ìunpopularity?¢‚Ǩ¬ù at some point in the future, well, get ready to pay the price.
A winning (consequently Republicans in Congress won’t adopt it) strategy should be this: instead of eliminating the AMT, reduce the rate to somewhere around 15-17%. Then allow people to opt in to the AMT permanently. This is essentially a flat tax, with all the large advantages attendant thereto. The result would be a pro-growth tax cut for people who opted in, reduce Charles Rangel?¢‚Ǩ‚Ñ¢s ?¢‚Ǩ?ìcost?¢‚Ǩ¬ù and implement a flat tax instantly.
In 2008, the Republicans in Congress would then have something to run on ?¢‚Ǩ‚Äú lower, flatter and more fair taxes.