Kowabunga

There is discussion going on in Congress to repeal, or at least provide relief, from the Alternative Minimum Tax (AMT). The problem is, they can't agree on who is wealthy and what the line is to dfine who is in the middle-class and deserving of a cut, versus those who are not.

Here's a concept: every American deserves a tax cut. Just abolish the AMT in total. Problem solved. Better still, revamp the tax code to a simple one page code that says every American will pay X% of their income regardless of income. Again, problem solved, and it makes filing our taxes easy. One tax rate can fit all. And the lower it is, the better.

From the Washington Post:

The debate has focused attention on a different surtax proposed by the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution. That plan would eliminate the AMT and replace it with a 4 percent surcharge on income over $200,000 for families and $100,000 for singles, cutting taxes for 22 million households and raising them for more than 3 million.

"Our plan is as simple as can be. And only 2 percent of the whole population would have to pay it," said Leonard E. Burman, director of the Tax Policy Center. The plan has the added benefit of abolishing the complicated AMT at all income levels, Burman said, an approach some lawmakers find attractive.

Except for the 4% surcharge on people making $100K, or families with $200K incomes, the plan sounds pretty good.

But wait, there's more:

On the other hand, fewer families' taxes would be cut, diminishing the ability of Democrats to capitalize on the plan politically. Since they took control of Congress in January, Democrats have made repealing or scaling back the AMT a top priority in hope of establishing tax-cutting credentials and seizing the issue from Republicans for the 2008 campaign.

Of course no issue is not without politicization. It's all about the Demos trying to look good to the voters, especially the middle class who makes up the majority of voters while sticking it too the so-called wealthy, or roughly 2% of the voter base, that carries the bulk of the tax burden.

Why am I not surprised.

The bottom line is that our current tax code is a voluminous mess that is greatly in need of being replaced with something that anyone can understand, rather than everyone making more than minimum wage being forced to hire a tax professional to deal with all of the convoluted laws.

Tags:
AMT Tax Reform