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Monday, January 08, 2007
Mallaby: AMT - Mend It, Don't End It
Sebastian Mallaby expresses some sensible thoughts on Sen. Max Baucus’s (D-MT) recent declaration of his desire to repeal the alternative minimum tax (AMT):
[A] prescription so fiscally crazy that not even the Bush administration supports it.
Indeed. Mallaby goes on to suggest a permanent AMT fix - in whatever form it may take - could be used as a chip to sweeten any future revenue-generation package, and Baucaus would be wasting this opportunity.
But, more importantly, Mallaby also makes the case that a repeal of the AMT is highly undesirable for two very important reasons:
- It would be extremely expensive - "$750 billion-plus over a decade" and
- The AMT is a progressive tax which is particularly warranted because "in an era of rising inequality, you don't slay progressive monsters casually."
As we’ve argued before, the AMT does need a few adjustments to restore it to being an equitable part of a tax code riddled with so many loopholes and exceptions that sometimes millionaires pay little or no federal income tax at all, but full repeal is simply indefensible.
Posted by Craig Jennings
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