Text 839, 168 rader
Skriven 2006-06-04 07:16:58 av John Massey (1:123/789.0)
Kommentar till en text av Alan Hess
Ärende: AMT turn out good?
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"Alan Hess -> all" <1:261/1000> wrote in message
news:17180$POL_INC@JamNNTPd...
AH> washingtonpost.com
AH> An Accidental Tax Boon
AH> By Robert H. Nelson
AH> Thursday, June 1, 2006; A19
AH> Sometimes in Washington, good things are more likely to happen by
AH> accident than by congressional or executive design. Treasury secretary
AH> nominee Henry M. Paulson Jr. is no doubt aware of this fact, but it's
AH> one worth keeping in mind in the continuing debate over tax reform,
AH> which is sure to command a good deal of the new secretary's attention.
AH> I'm thinking of one program in particular: the alternative minimum tax, or
AMT.
AH> The AMT is viewed by many as a bad thing. Yet, consider this: There is
AH> wide agreement among economists on the benefits of a federal "flat tax"
AH> on income that would apply a uniform rate to every taxpayer and
AH> eliminate most current deductions and tax credits. A flat tax would get
AH> rid of a large number of economic distortions resulting from the many
AH> tax "subsidies" that often benefit narrow interest groups. This is tax
AH> "pork," and Congress is as addicted to it as to the ordinary spending
kind.
AH> In places around the world, including Eastern Europe, governments
AH> creating new tax systems have been turning to a flat tax to avoid this
AH> sort of thing. What does this have to do with the AMT? Just this: As
AH> Post business reporter Albert B. Crenshaw has noted, the AMT "approaches
AH> a modern-day flat tax." It imposes a uniform rate of 26 percent up to
AH> $175,000 in income, and above that 28 percent.
AH> Tax revolutions are few and far between. Taxes are so important to the
AH> economy that major changes in tax law are best achieved incrementally,
AH> giving notice well in advance and avoiding potentially large disruptions
AH> from big surprises. That's part of the genius of the AMT. If it is left
AH> alone, it will move us gradually but steadily toward a flat tax on
AH> income as inflation brings more people within its ambit.
AH> Some leading Republican conservatives have long advocated a flat tax.
AH> Yet few of them are speaking out vigorously for retention of the AMT. In
AH> fact, many are joining the clamor in Congress for its repeal or
AH> limitation. It would seem that they were either hypocritical in
AH> advocating a flat tax or have somehow failed to recognize that the AMT
AH> is in essence a new, evolving form of flat tax.
AH> Many Democrats are joining the calls for drastic cutbacks in the AMT.
AH> This shows a certain disregard for the fact that the existing system of
AH> tax subsidies is most generous to higher-income groups and does less for
AH> the bottom half of the income distribution -- their supposed constituency.
AH> The alternative minimum tax dates to the 1960s -- and in its present
AH> form, to the 1980s. It was never intended as a major tax reform but
AH> rather was simply a political expedient to provide some cover when a few
AH> very rich people were revealed to be paying little in income taxes. But
AH> as Americans' incomes have risen, more and more people have been finding
AH> that their tax payments are now determined by the AMT.
AH> Congress has already taken steps to reduce the AMT's impact. The
AH> recently enacted tax bill raises the special AMT "standard exemption" to
AH> $62,550 for a couple filing jointly and to $42,500 for a single filer.
AH> At these levels, some 5 million taxpayers will be subject to the AMT for
AH> their 2006 taxes. But these changes are for one year, and absent new
AH> congressional action, the exemption will fall back to $45,000 for
AH> couples and $33,750 for individuals in the 2007 tax year. If that
AH> happens, as many as 25 million taxpayers might be affected by the AMT.
AH> We would be moving toward a nationwide flat tax.
AH> If we wait long enough, and with some continuing degree of inflation,
AH> the AMT flat tax eventually will apply to most taxpayers. The AMT will,
AH> in effect, have become the federal income tax system. And unlike most
AH> other important policy changes, this is one in which Congress need do
AH> nothing, although at some point it would probably be desirable to modify
AH> details of the current AMT that limit its effectiveness as a flat tax.
AH> If the present AMT rates were applied as a universal flat tax -- and
AH> especially if the AMT exemption were reduced and certain remaining AMT
AH> exclusions eliminated -- the resulting federal revenue might even come
AH> to exceed current expenditure levels. The solution would then be to
AH> reduce the flat tax rate (the AMT rate) so that revenue and expenditures
AH> were brought back into balance.
AH> In the longer run, the AMT could open the way to more radical reforms
AH> that might even change the basic nature of Washington spending habits.
AH> One option would be as follows: Each year the president would submit his
AH> budget proposal, and Congress, in response, would enact final
AH> appropriations. A neutral expert commission would then estimate the
AH> resulting federal revenue requirements, and a new flat tax rate,
AH> calculated to balance the budget, would be set for the forthcoming tax
AH> year. If Congress wanted to go on a spending spree, taxpayers would see
AH> the consequences directly and immediately in their pocketbooks.
AH> The Social Security system is another area in which the AMT might
AH> facilitate radical change. Social Security taxes could be abolished and
AH> the flat tax adjusted upward to compensate for the lost revenue. The
AH> Social Security trust fund is largely an accounting fiction, and it is
AH> time to integrate the Social Security tax with the income tax system.
AH> Alternatively, Social Security tax payments could become a deductible
AH> credit from the required AMT payment.
AH> Such major changes in tax law, and some needed refinements to the
AH> existing AMT, can be debated and discussed. Right now, the most
AH> important step is to keep Congress from ruining a good thing. If it can
AH> be persuaded to leave the AMT alone next year and in future years,
AH> Congress will continue progress toward a flat tax revolution that has
AH> been in the works for many years. Such a gradual process is probably the
AH> only way the United States will ever adopt such a major change. The AMT
AH> is a tax policy windfall that ought to be protected and preserved.
Here are some flat tax vs. FairTax issues some of you may want to consider.
1. In 1986 the Congress reformed our tax code to essentially give us a flat
tax ... a flat tax with two rates. Fifteen and twenty-eight percent. Most
deductions were eliminated. Today's tax code is the result of that effort.
The 1986 tax code has been amended over 10000 times.
2. A flat tax leaves the IRS in place. You'll still have to report your
income to the IRS every year, and you'll still be subject to audits.
3. Social Security and Medicare payroll taxes? Still there.
4. Do you get 100% of your paycheck? No. Withholding will still be there.
5. Business taxes? Still there .. and they'll remain embedded in the price
of every good and service you buy, so you'll be paying them.
6. Corporate board meetings? They'll still spend an inordinate amount of
time working on the tax implications of business decisions, rather than just
basing their business moves on what's best for their customers and
shareholders.
7. K Street lobbyists? They're still there too. They'll still be drawing
their six-figure incomes while they game the new flat-tax for the benefit of
their clients.
8. Bring American businesses back home? Nope. Business taxes are still
there, so American businesses will still locate their operations overseas
in order to escape our punishing business income taxes.
9. Death Tax? Gift Tax? Still there in all the flat tax proposals I've
seen.
10. Will the flat tax bring American wealth back home? The latest estimates
put $10 trillion of American wealth in offshore financial corporations.
There is only one reason that money isn't back here working ... and that's
our income tax structure. Will the flat tax bring that money back home?
Nope. The FairTax? Yup.
11. What about the poor? They're not paying income taxes now ... will they
pay the flat tax? No way! But politicians will still be looking for a way
to raise taxes on the rich so that they can relieve the poor, poor pitiful
poor of the responsibility for paying for their own Social Security and
Medicare.
12. Will all Americans be able to buy the basic necessities of life without
any federal tax consequences under the flat tax? No. The FairTax? Yes.
13. Will foreign visitors to our shores contribute to our Social Security
and Medicare programs under the flat tax? No. The FairTax? Yes.
There's just a few points. From my point of view, the flat tax pales in
any comparison to The FairTax.
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