Thursday, December 15, 2005

1898 Three a day

According to Forbes, from the start of 2001 through September 2005, Congress made 1971 changes to the U.S. Tax Code--roughly three for each day it was in session. But the ONE thing they needed to do, they haven't--change the Alternative Minimum Tax so that 15 million citizens don't get bumped into a higher tax bracket.

"Senate Majority Leader Bill Frist, R-Tenn., said Tuesday that Congress has run out of time this year to act on legislation that would save millions of taxpayers from the grasp of the alternative minimum tax in 2006.

The tax was created decades ago to prevent the wealthiest citizens from sheltering most of their income from the Internal Revenue Service. But because inflation has driven wages higher through the years, it increasingly threatens more taxpayers considered to be middle-class, with incomes of between $50,000 and $75,000."

The AMT was created in 1969 to assure that millionaires paid their fair share. Trying to soak the rich is not a good tax plan--the next rung up the ladder might be where you land and someone below will decide you are the rich guy. While only 19,000 people owed the AMT in 1970, over 3 million are paying it now, according to the IRS. It requires that you figure your taxes twice and pay the higher amount. You can be penalized for paying state and local taxes or deductions for your children. Instead of catching people with large investments, it's grabbing those with large families. It should be scrapped.

Who's minding the store? Certainly not the Republicans who control Congress. The economy is booming and will falter if the tax cuts instituted by Bush are allowed to die. Tax reform and Social Security reform are being bumped off the agenda by headline grabbing Democrats and their torture issues. So much better to torture Americans with high taxes. They were wrong last year about "worst economy in 70 years" and couldn't win votes with that. They are wrong about Iraq which today is proving to be on its way to a democracy. So they've tried a new schtick. We've got gulags sprinkled around and we're torturing people.

This will come back to bite you, young Democrats and young Republicans. Your baby boomer parents may pass on to their reward before they ever get a chance to pass anything on to you thanks to Congress' inaction (maybe its revenge of the Republicans?). The capital gains cut expires in January 2009 and by 2011 you may be in a bracket to enjoy a return to the 40% bracket. Or you may get married and get the marriage penalty reinstated, which will return in 2010.

No comments: