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By Hugo Gurdon
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Posted: 04/16/07 08:22 PM [ET] |
Democrats have found an ideal issue with which to burnish their image with voters unaccustomed to regarding them as a tax-cutting party.
The Alternative Minimum Tax (AMT) was meant to prevent a handful of millionaires using deductions to avoid paying any income tax at all. (Yes, there was a time, before Dr. Evil emerged from his cryogenic sleep, when $1 million was thought a fabulous sum.)
Now, however, because the tax threshold is not adjusted for inflation, middle class people are being hauled by the millions into the AMT net and their legitimate deductions are being wiped out. Some 3.4 million taxpayers fell into the AMT pit with the returns they filed this week, and about another 20 million will tumble in 12 months from now. This is not what Congress intended, at least ostensibly, when the tax was introduced in 1969 and it certainly is not what the new Democratic majorities want voters to think about in November next year.
Thus, it is a fair bet that the Democrats will get AMT reform done this Congress. More taxpayers in blue states are hit by the alternative minimum than are voters in red states. The extent to which AMT is mainly a Democratic issue can be gauged by the fact Republicans, in the 109th Congress, discussed balancing reform with an issue much closer to their own supporters’ hearts and pocket books — the elimination of the estate or “death” tax.
Now, in control, Democrats do not need such bargains; Republicans are unlikely to demand that AMT stay unreformed. Thus, reform offers Democrats a wonderful combination of advantages, allowing them both to seize a popular tax-cutting mantle and proclaim themselves the champion of the aspiring middle class, while also doing most good to their own voters rather than to the GOP’s.
No wonder congressional Democrats are ginning up their rhetoric on the subject. In his Saturday broadcast, which followed President Bush’s regular weekend radio address, Rep. Rahm Emanuel (Ill.), chairman of the Democratic Caucus in the House, presented AMT reform as akin to motherhood and apple pie. It was, he said, a tax that inflicted pain on parents and families.
But the AMT also brings hundreds of billions of dollars of revenue sluicing into the Treasury. The party will have to find such revenues elsewhere — the agenda implies increased spending — and intend to find it, apparently, by taking more from the genuinely rich. The devil is in the detail — the actual number deemed to make a person rich in 2007. |
