Bush's Secret Tax on Democrats
How the Alternative Minimum Tax has become a Republican weapon.
So what's the problem? After all, tax revenues have to come from somewhere, so why not AMT payers? Economists point out that the AMT has become a nonsensical tax, totally disconnected to its intended purpose. As taxpayer advocate Nina Olson pointed out in her Dec. 2003 report, the AMT now functions "randomly, no longer with any logical basis in sound tax administration." The AMT no longer serves to trap wealthy tax avoiders as it was designed to do. Instead, because it isn't indexed, it punishes people who were never intended to be its targets.
The administration, out to lunch on so many aspects of economic policy, is either oblivious or willfully ignoring the AMT problem. A few bills were introduced last year to deal with aspects of the AMT tangle, but there's been no sign of progress. It's hard not to conclude that there are some pretty crude political calculations behind the inaction. Most of the victims of the AMT live in places where Bush and many Republicans can't compete. Besides, with Bushenfreude still rampant, Republicans know that offering high-income, coast-dwelling liberals tax relief won't help the GOP in November.
Daniel Gross is the Moneybox columnist for Slate and the business columnist for Newsweek. You can e-mail him at firstname.lastname@example.org and follow him on Twitter. His latest book, Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation, has just been published in paperback.
Illustration by Robert Neubecker.