Democrats raised the AMT tax rate in 1993--to 26% and 28% from a single rate of 24% as part of Bill Clinton's tax increase of 1993. According to the Joint Committee on Taxation, the AMT would have hit "only" 2.6 million Americans next year if not for that tax hike.In other words, we could get rid of 90% of the AMT taxpayers by the simple expedient of returning to a 24% AMT tax rate! I wouldn't have thought four points could make that much difference. This deserves a serious look.
Sunday, April 15, 2007
An AMT factoid that I did not know
The two most commonly cited reasons for the explosion of AMT taxpayers are (1) the exemption was never indexed to inflation, and (2) the Bush tax cuts lowered the taxes of many families down to and below the AMT cutoff, pushing them to that side of the ledger. But OpinionJournal points out that another key culprit is the boost in the AMT tax rates enacted in 1993.
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2 comments:
You, tax guru Jim Gust, didn't know that?
The 1993 corruption of the AMT not only did away with its original nature as a "flat tax," the greedy legislation added enough complications to make the AMT incomprehensible to mere mortals.
Returning to the pre-1993 AMT is an excellent idea.
Fat chance.
Last time Congress enacted anything like an excellent idea in tax legislation was the reform act of 1986-87. And they managed to botch even that.
Although I did know about the 1993 AMT tax amendments, I had no idea that they multiplied the incidence of the AMT by a factor of 10—and in fact that may be a more recent phenomenon.
I certainly agree that the 1986 reform act was excellent, but I also credit the 15% rates on qualified dividends and long-term gains as good ideas that have helped the economy.
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