Interesting editorial in this morning’s Wall Street Journal: Liberals for Tax Cuts!:
A strange and astonishing thing is happening in Washington as a House-Senate conference committee debates its final tax bill: Democrats are discovering the virtues of cutting taxes for "the rich." Of course there’s a catch, but the political by-play is too amusing to ignore and might even help tax cutting in the future.
This new-found liberal demand for tax relief concerns one of their own creations — the alternative minimum tax. The notorious AMT is the IRS’s revenge on taxpayers who dare to take entirely legal tax deductions. Make enough money while deducting for (say) state taxes and the child tax credit, and the AMT sweeps you up lest you pay too little tax. As a friend of ours quips, it should really be called the RMT, for required maximum tax.
Liberals designed the AMT back in 1969, ostensibly to snare (literally) 21 millionaires who managed to pay no income tax at all in 1967. But as incomes and deductions have increased over the years, the AMT has gradually hit more and more taxpayers, especially the upper-middle-class in such high tax states as New York, New Jersey and California. It’s a liberal tax that now hits liberal states especially hard.
Which explains why blue state Democrats are suddenly demanding that GOP tax writers include AMT relief for 2006 as part of the tax package that is now in conference. Without such relief, the AMT may hit as many as 20 million households next year, up from nearly four million this year. Max Baucus, the ranking Democrat on the Finance Committee, insisted that Chairman Chuck Grassley include AMT relief in the Senate bill, and such famous class warriors as Hillary Clinton and Chuck Schumer actually voted for the tax cut.
2 responses to “WSJ: Liberals for Tax Cuts!”
WSJ is wrong on the facts again. The Alternative Minumum Tax took its current shape as one of Richard Darman’s overly clever gimmicks in order to make the 1986 Tax Act look “revenue neutral” over a 5-year window, when in fact there was a huge revenue hole in the out years. [As Bush Sr. and Darman (become Budget Director) found out when the lipreading stopped in 1990-91.]
Wall Street Journal editorials never give you even half the pertinent facts, but this sets a new record for being minimal with the truth when they want to indulge in sophomoric conservative snottiness. What’s being pressed in Congress is a move to adjust the AMT threshhold for inflation rather than let it become what it was never intended to be — a tax on the middle class. If adjusting taxes for inflation is a “tax cut” then federal income taxes have been cut every year since the early ’80s. I’d like to see the Wall Street Journal editorial board say just that the next time they rail against high taxation, but I won’t hold my breath.