Today is the day liberals rejoice in the formal, non-violent transfer of wealth.
But this year may be different. Liberals have finally found a stealthy, soak-the-rich tax increase they don’t like–and, better yet on this annual tax-payment day, their revelation may make tax reform possible. A piece in the WSJ (hat tip: Michelle):
In the waning days of the LBJ Presidency, Joseph Barr became Treasury Secretary for all of 30 days on a recess appointment. On January 19, 1969, he created a political sensation by telling the Joint Economic Committee that in 1967, 21 millionaires had managed to pay no income tax at all. This was deemed an outrage, and Congress spent the next decade designing federal tax policy in Quixote-like pursuit of those 21 millionaires.
The AMT was one result, and like many soak-the-rich schemes it captured only a small number of taxpayers at first. But because it wasn’t indexed for inflation, and because prosperity has lifted the incomes of so many Americans, the AMT has begun to pinch millions and now threatens the middle class. As the nearby chart shows, on present trend the AMT will hit an estimated 3.8 million taxpayers this
year, 20.5 million in 2006, and 34 million by the end of this decade. By 2009, the AMT will collect more revenue than the regular income tax.
Especially, er, rich, is the fact that the AMT is biting hardest in the most liberal, high-tax states. That’s because the AMT doesn’t allow deductions for state and local taxes the way the regular code does. So middle-class taxpayers in New York, California and other states with high income-tax rates are getting hit sooner than people in, say, Florida or Wyoming. It is the ultimate blue-state tax.
This helps to explain why people who normally thrill to higher tax rates are suddenly up in arms. Liberal newspapers are now denouncing the AMT as a “tax increase” and blaming the White House for not doing more to stop it. “The AMT needs to be fixed,” moans Senator Barbara Boxer’s spokesman, in what has to be a tax-reform first. “We need to address the AMT, which is trickling down to catch more and more middle-class families in New York,” says Empire State Senator Chuck Schumer, another Saul on the road to Tarrytown.
Liberals finally want to call for a tax cut when they find themselves with no loopholes through which to escape. “Who knows, this entire AMT experience might even induce liberals to reconsider the wisdom of soak-the-rich tax policy.
At least we can dream.
Happy April 15th.”
Update: Maybe the dream will become reality…