Msnowe's Blog

Asystolic AMT needs Fiscally Responsible EMTs

Posted in Uncategorized by m.snowe on November 18, 2007

Patient: Alternative Minimum Tax (AMT)
Time of Death: 1970… give or take.

Why do we keep a dead and rotting system of taxation? The Alternative Minimum Tax was founded on a wonderful and amazingly ethical premise: keep the nation’s wealthy and uber-wealthy from using deductions, etc., to completely eliminate their federal taxes (i.e. a few donations here, a few adopted children there – Presto!: You make millions and never worry about taxes, in a lovely legal loophole sort of way, so you can sleep at night free of ethical bogey men, dressed as IRS agents).

Originally, the AMT was a lovely and worthwhile sentiment, but you have to wonder just what the dunderheads in 1969 were playing at, when they decided to forgo a measure to index the AMT for inflation – so as the times change, and the weight of the dollar deceases, and people’s money goes up (along with cost of living to even it out), more people fit in the AMT’s bracket, yet they really aren’t more than middle class. The AMT should be compared side-by-side with the Y2K phenomena – and people would understand the detriment of this tax – because unlike Y2K, this isn’t hyped in the media and a topic of worry and potential fiscal calamity the world over — but it definitely should be, because the AMT will affect a growing number of people who are by no means independently wealthy as the years tick on.

Now Congress is dragging their feet (of course) and it’s always a touchy subject when taxation is on the operating table. Republicans and pro-business Democrats are decrying the loss of tax revenue if the AMT is fixed or done away with, but they don’t seem to understand the essentials here: the tax is malfunctioning, and that extra revenue they’ve already spent on funding all their pet projects is not really legit – it is fruit of a poisonous tree, and should be thrown into the pulper (along with their earmarks). The ways and means committee has introduced a bill, that would essentially take the burden off anyone earning under $200,000 – and tighten up many loopholes that let venture capitalists, real estate investors and hedge fund managers (who usually earn in the millions) write off taxes in unfair ways.

The GOP and a few Democrats call this paramount to a tax increase, and Bush has vowed to veto any fix to the AMT that would increase taxes in any way. Okay. So lets analyze, shall we? Essentially, once the AMT was created, the wealthy, and large corporations have discovered other ways to forgo taxes legally, yet slightly unethically and shadily – usually having to do with overseas operations, etc… And what this new system would do is prevent these tremendously wealthy people from evading the taxes created for them to pay in the first place – so essentially, the taxes are not being raised – they are being made more enforceable, and legitimate. And even if this wasn’t the case, and congress just decided to raise taxes for the wealthiest people, doesn’t that make sense? The wealthiest people should be paying the most taxes, that is what our system is based upon – we have a scaled/gradient-based taxation system, that works to ensure that. If Bush wants to fix the AMT, so that more and more middle class people aren’t subject to it, how can anyone do that without raising somebody’s taxes? Of course, Bush is notorious for only vetoing bills that make perfect sense – this is like Bush saying “I must veto this bill, because it sets a timeline for withdrawal,” while knowing perfectly well that troops will have to come home on a certain schedule, because of the sheer fact that tours of duty will expire on certain dates (short of stoploss, that is).

It’s puzzling how Bush and his veto threat can claim to be defending the middle class, when the only people this bill will effect negatively is huge corporations and fat cats – who would barely feel the suggestion of a pinch, given their bankrolls. And the idea that this tax will somehow hurt certain sections of the economy and therefore the entire US economy, starting with real estate investors, is ludicrous, if not entirely laughable – it’s real estate investors in the past decades who have acted completely fiscally irresponsible, and caused a housing mess with sub prime loans that’s making our economy sag – if anything, this would be nothing but a justifiable payback, a finding in the court of public opinion for pain and suffering damages – yet the tax fixes of this bill would be nowhere near enough. If pinching the big guns helps out, or relieves the burden of anyone who is now facing foreclosure, then it is a job well done.