Rick Perry's Plan Doesn't End the AMT

Rick Perry's Plan Doesn't End the AMT

Rick Perry's Plan Doesn't End the AMT

Weigel
Reporting on Politics and Policy.
Oct. 27 2011 3:54 PM

Rick Perry's Plan Doesn't End the AMT

Rick Perry's big tax plan rollout left at least one big question unanswered. If Perry got his way, the old tax code would survive. A new flat tax would be built alongside it. You -- yes, you -- would get to choose which code you like.

One problem. If you pick the current code, you would still be vulnerable to the Alternative Minimum Tax. Originally designed to make sure a small group of people paid taxes, the AMT is not indexed to inflation, so a larger and larger number of people now end up paying it, often by surprise.

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Just to be sure, I asked Perry campaign economic adviser Will Franklin to clarify. Does the Perry plan kill the AMT?

"No," said Franklin. "It goes away under the flat tax plan, unless you consider income minus the few remaining exemptions/deductions times 20 percent to be an AMT. I don’t, and I don’t think any serious person would. If you avoid the new flat tax, stay in the old system, and choose to pay the AMT, you’re doing it wrong."

Here's another way in which the Perry plan both simplifies and complicates the code. Other campaigns have avoided doing that. Jon Huntman (remember him?) creates three lower tax brackets, with no deductions, and ends the AMT. Cain's two-step 9-9-9 plan obliterates the current code, so AMT is history anyway. The Perry plan keeps the old code around for all of its unweildiness -- it's almost like one big Sunstein-ian "nudge" to get people out of the current system.

David Weigel is a reporter for the Washington Post.