The Alternative Minimum Tax (AMT) was designed to stop high-income earners from paying no income taxes but, because it was never indexed to inflation, it affects more and more upper-middle class earners every year. The regular congressional response has been passing one-year-at-a-time “patches” to the law, limiting the number of affected individuals.
New House Ways and Means Chairman Charles Rangel sees this as the opening to “reform” – his code word for “massive tax increases.” Robert Novak reports at Real Clear Politics:
But Rangel has refused to pass a patch, and he has not hidden what he has in mind. When Congress returned from its summer break, Ways and Means summoned the usual lineup of tax redistributionists for a Sept. 6 hearing on “fair and equitable tax policy for America’s working families.” Jason Furman, director of the Brookings Institution’s Hamilton Project, deplored “the increase in inequality” caused by the Bush tax cuts, which he said “have exacerbated after-tax income disparities.”
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Rangel talked about closing “loopholes,” but the real money would come from drastically increasing the number of Americans paying the top 36 percent income tax rate and applying that rate to present capital gains taxpayers. Rangel also is considering the old millionaires’ tax, but applying it to much more than millionaires: a surtax on household incomes over $200,000. All this would reverse the tide of across-the-board tax reduction begun by John F. Kennedy and Lyndon B. Johnson and renewed by Ronald Reagan.
Read it all at the link above. Naturally, Democrats don’t like to talk about this much during election campaigns, but their core belief in taxing and spending has never changed.
The Rangel plan is economic stupidity under the guise of “tax equity.” On the bright side, if he were able to pass it – even it isn’t until a Democratic Administration again runs the White House – it will quickly remind voters of the harsh reality that national security isn’t the only thing Democrats are unfit to manage.