November 2004 Archives
I believe in a moderately progressive tax system. If you think we should soak the rich to pay for everything, fine. If, you've bought-in to the mythos of self-made privilege, fine. I disagree with both extremes. This is a tired argument that no one ever wins and I'm not going to have it here.
So what's my problem with Bush's tax cut? After all, it's still a progressive scale, just slightly less so and with lower percentages. Everyone gets a little bit of a break, right? If you can (somehow) ignore the massive spending increases that have occurred in recent years, those tax cuts should be downright pleasant, right?
My problem with the cuts is that they completely ignore the elephant in the room: the Alternative Minimum Tax. I believe this is no accident, and that these cuts are actually designed to abolish the progressive tax system altogether. Here's why:
The AMT is a secondary tax system that was originally targeted at very wealthy people who were using loopholes to avoid paying taxes. Unfortunately, because its caps are not adjusted for inflation, it is now increasingly encroaching on the middle class. Though it is rarely mentioned in the news, everyone in Washington knows that this is a huge storm looming on the horizon.
Reforming the AMT is going to be treacherous under the best circumstances. In five years' time, though, we will have an immense deficit and a middle class squeezed by a massive and ever-increasing tax burden. Under these conditions, AMT reform will be unthinkable. It will be framed by conservatives as 'another tax cut' which we cannot afford. The only sensible option, of course, will be to completely revamp the tax code and institute something else, something...simpler.
In other words, the real plan here is to put the screws on the middle class until they beg for relief in the form of a flat tax.
Here is more information about the AMT and its relationship to the Bush tax cuts. It provides a fair amount of evidence to support my claim. And please, no whining about the source - Brookings is about as middle-of-the road as they come, and in any event this document is pretty impartial.
