Mostly rational politics, with occasional rants about how a few crazy Republicans are ruining the country.
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Wednesday, October 19, 2005
Misguided Tax Reform
The Bush administration is working on 2 proposals to reform the tax code, to fix the problem of the Alternative Minimum Tax (AMT) hitting more and more middle class taxpayers each year.
The problem is, they're addressing the problem in a roundabout way, rather than fixing the actual problem. The AMT was created to stop millionaires and billionaires from finding tax loopholes... this is a worthwhile idea. So let's keep that.
But the problem is that the formula was poorly devised, and not indexed to inflation, so each year more regular people get hit with it.
Bush's solution? Abolish it altogether (with a wink to his billionaire buddies), and replace the lost money with a hit to blue states like New York, by getting rid of the state income tax deduction.
We may be gearing up for another Social Security type battle here. Only this time, there really does have to be a solution soon, because the AMT as currently constituted is a bad deal.