Bill Frist said yesterday that the Alternative Minimum Tax wouldn't be voted on until next year.
Now this is something that quite a few people want fixed! It's creating huge bills for well-off but not ultra-wealthy folks who are already worried about mortgages, college tuition, et cetera, but really couldn't care less about dividend cuts or the estate tax. In other words, it's squeezing the middle class, which is what the Republican party claims to care about. By some reports, it now affects 15 million taxpayers.
So why aren't they fixing it? More on the flip.
They don't want to.
It's really that simple. The Republicans don't want to fix the AMT. They have the resources to allow them to do it if they did - heck, they passed every other kind of ridiculous tax cut with a deficit approaching half a trillion dollars. So why not fix the one wrinkle in the tax code that's really starting to grab the upper middle class, their natural constituents?
Because it might take away a reason to vote for them.
Background: Even after both the House and Senate passed ridiculously large tax cuts, the Alternative Minimum Tax still remains on the books, the boogeyman of the middle class. Originally a way to keep the ultra-wealthy from taking so many tax write-offs that they didn't pay their fair share, this circa-1960 addition to the tax code wasn't indexed to inflation, and so is now catching increasing numbers of middle class families - 15 million Americans, according to yesterday's Times. Every time a tax bill comes up, this particular tax, which is starting to catch many families that make between 100k and 200k a year and even some that make less than that, is debated, but not much gets done. Here's why.
As it is now, Joe Middle Manager making $150k a year probably has a few reasons to vote for Republicans and a few reasons to vote for Democrats, but like most Americans, he's a bit selfish when it comes to his money and he wants to keep it. So along come the Republicans saying they want to cut taxes, and he goes with them. But next year, his tax bill is still high. So he votes for the Republicans again, figuring that they must've cut taxes just a little, and they'll get to him next. The year after that, his tax bill is still high - but he hears that the Republicans are cutting taxes again, so he figures next year will be better. The year after that, his tax bill is even higher! He can't figure it out, but something called the AMT just bit him in the ass. The Republicans still say they want to cut taxes again, so Joe Middle Manager says, "about damn time!" and pulls the R lever again.
If they repealed or revised the AMT, Joe's taxes would go down - enough that he wouldn't vote based on how much stays in his wallet. So they won't. The Republicans want the average voter's taxes high enough that they'll vote for the party of tax cuts, so that they can keep cutting taxes on the ultra-wealthy and screwing the rest of us.
Chuck Schumer is quoted in the article as saying, "This should have been our #1 tax priority." Well guys, there's no reason to stop now! Offer an amendment to repeal the tax next year, or altogether, or better yet an amendment indexing the tax to inflation retroactively to the year it was passed! If the Republicans vote it down, we win the tax war.
Imagine, in next year's elections, Republican candidates saying that they want to cut taxes, and Democratic candidates responding by asking them, "then why didn't you want to cut the Alternative Minimum Tax? It affects 10 times as many taxpayers as the dividend tax or the estate tax. The only tax cuts you voted for were the ones that went to the rich." Republicans could cry class war, but for once we'd have a nice, juicy fact on our side instead of a hypothetical.
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