An actual AMT for the rich?

In today's NYTimes Warren Buffett proposes a sensible-seeming idea, a minimum income tax on income in excess of $1 million. See here.  He wants a 30% tax on $1 million to $10 million, and a 35% flat tax on all income over $10 million.  Buffett claims that such a tax will have zero impact on the investment decisions of the rich.  In today's ultra-low interest rate environment, he may have a point.

As background, keep in mind that the current AMT is not, in general, paid by the rich, because for the most part their ordinary tax rates come in higher than the AMT rates.  The real AMT target is the merely affluent, mostly those families who live in the high-cost, high-tax blue states.  It's their above-average use of deductions that push them into the arms of the AMT.

Buffett's proposal would be a meaningful tax hike at the high end, but there is a dog not barking in his op-ed.  He implies that the highest-income taxpayers enjoy low rates because they don't top out at 39.6% instead of 35%, and because they take advantage of the 15% rate on long-term capital gains.

Warren completely ignores the role of tax-free muni bond income in this equation.   For his 35% minimum tax to have any meaning at all, muni bond income needs to be fully taxed, at that 35% rate.  Otherwise, this is just a lot of smoke.

I, for one, welcome the full taxation of muni bonds, even though I own some and would be hurt by the change.