Demanding a federal budget that is fair, responsible, and meets our nation's priorities

Tuesday, February 27, 2007

WSJ Tax Hacks vs. AMT Facts

Linda Beale, law professor at Wayne State University Law School, provides a much more detailed rejoinder to the Wall Street Journal piece, Bill Clinton's AMT Bomb," than we could in our blog yesterday.

Her main points are as follows:

• The 2001-2006 tax cuts passed by the Republican-dominated Congress and the Bush Administration were packaged with no plan to repeal the AMT, since AMT revenues were needed to pretend that the tax cut package was considerably cheaper than it was known to be
• The AMT's reach is due to a combination of lack of inflation adjustment and the Bush tax law changes, which had a predicted and quantifiable impact, increasing the number of taxpayers paying AMT taxes and the tilting the distributional impact tax
• To suggest, per Sen. Grassley, that the cost of repeal of the AMT should not be taken into account because the AMT was never intended to tax who it taxes is utter nonsense. Congress fully intended for the AMT to continue to operate, or it would have repealed the AMT as part of its tax cut packages in 2001 or 2003. It gave priority to cutting the capital gains taxes on the wealthiest Americans, and not to preventing the AMT from creeping lower down into the middle income brackets than it would otherwise have done

Beale exposes the WSJ's peculiar logic most tellingly when she points out that

...the Journal blames Clinton for not indexing the AMT exemption to inflation. That's like the pot calling the kettle black. At some point, someone should decide just how far down the AMT is targeted, set the exemption appropriately, and then index it for inflation. But the Bush Congress didn't do anything but a year-by-year "fix" to the exemption amount, and even then only when it was pushed to do so. Why does the Bush-supporting and Clinton-bashing Journal pick out the failure of the 1993 changes to index the amount as the time it didn't get indexed, instead of the 2001, 2003, and other changes during the Bush administration?