Seeker Blog

Tigerhawk has a must-read piece today on the Alternative Minimum Tax. Don’t miss this one:

According to the Times, the AMT will suck up so much revenue that it will virtually replace the Bush cuts to the federal income tax:

Seen or unseen, the looming [AMT] tax increases are almost as large as the president’s tax cuts. Leonard E. Burman, a senior fellow at the Urban Institute, estimated that the government would have to raise ordinary income tax rates substantially in every bracket to offset the money lost in each bracket by the elimination of the alternative minimum tax. People in today’s 28 percent bracket, for example, would have to pay a top rate of 35 percent. Those who now pay a top rate of 33 percent would pay 41.4 percent.

This is obviously frustrating both to Republicans — who actually want to cut taxes — and to Democrats, who want to accuse Republicans of having destroyed the fiscal condition of the country. President Bush, for his part, has appointed a bipartisan advisory panel to come up with recommendations for reforming the AMT as part of a broader reform of federal taxation, but has made it clear that any proposed reform must be neutral to revenues in the aggregate.

The problem is, it is hard to see how it is to the political advantage of Republicans to reform the AMT. As I have written before, if the Republicans were to reform the AMT they would accomplish four things, none of which will obviously benefit them politically.