Saturday, June 09, 2007

Democrats trying to soak the "rich" (again) Democrats trying to soak the "rich" (again)

According to WaPo: Democrats Seek Formula To Blunt AMT, the Democrats running Congress are trying to crank up the taxes on the "rich" to alleviate the AMT that is expected to bite 23 million taxpayers this next spring. One proposal by the Urban and Brookings Institutes would raise taxes on individuals making more than $100k (and families over $200k) by 4% in order to reduce the bite of the AMT. Never mind that $100k is far from rich, or that those getting hit by this surtax are already paying most of the taxes in this country. So, the more reasonable proposal is making the rounds, of only applying a (slightly larger) surcharge of 4.3% to incomes over $250k (or $500k for married filing jointly).

Of course, the solution would be to just eliminate the **** AMT. But that can't happen, because of the static analysis that Congress has intentionally imposed upon itself. Tax cuts must be offset with either spending cuts or other tax increases. And, of course, Congress is incapable of cutting spending. But this rule ignores that taxes significantly cut into economic growth, so cutting tax rates can often bring in more taxes.

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