Posted on 07/20/2005 12:51:23 PM PDT by Your Nightmare
Members of President Bush's advisory panel on tax reform largely agree that the individual alternative minimum tax, or AMT, should be fully repealed the committee's chairman said Wednesday.
"I think the obvious consensus was on the AMT on the individual side. We didn't end up with a consensus on the corporate side, even though I think it's fair to say that I think all panel members felt the corporate AMT was really not an effective way to tax," Chairman Connie Mack, a former Republican senator from Florida, told reporters after a public meeting of the committee.
The AMT is a parallel tax system created in 1969; it was enacted after it was revealed that a handful of extremely wealthy Americans paid no income tax. But thresholds for the AMT were never indexed for inflation. As a result, it has encompassed or threatened a growing number of middle-income taxpayers over the years. Lawmakers and administrations have responded by temporarily pushing up the threshold, but have yet to come up with a complete fix.
It's also become a substantial revenue source. Full repeal would reduce revenues by more than a trillion dollars over 10 years.
During the panel discussion, committee member Bill Frenzel said he agreed that it was time to "bite the bullet" and press for full repeal, but warned that doing so will put a "huge burden" on the panel to find a way to make up the lost revenues.
The panel's vice chairman, former Democratic Sen. John Breaux, said that while he's not a fan of the AMT, the panel must examine whether the full repeal of the system would allow some of the nation's highest earners to get away with paying no tax at all.
Mack replied that if that were the case, the committee would have to make adjustments in order to maintain roughly the same tax burden on the upper quintile of earners that is now in place.
The panel members agreed that changes to the corporate AMT would best be tackled as part of a broad corporate tax reform, Mack noted.
The committee, formally known as the President's Advisory Panel on Federal Tax Reform, must present the Treasury Department with a set of tax-reform proposals in September.
Bush has set a number of ground rules for the panel, however. The proposals must be revenue-neutral. Also, future tax measures can't touch the code's most sacred cows -- mortgage interest deduction and charitable giving.
In a blow to the FairTax Fanboys, the Panel had Treasury run the numbers for a NRST with the FairTax base, a "prebate," and the current level of evasion. They came up with a 34% exclusive rate, (25.4% inclusive) just to replace the individual and business income taxes. That doesn't even include payroll taxes!
Needless to say, the proposed FairTax rate of 29.87% (23% inclusive) to replace income and payroll taxes is, and always has been, a fantasy.
ping
The amt tax was put into place when the tax rates were as high as 70% and there were a lot of tax shelters to counter the high tax rates. To counter people paying no taxes a SECOND tax calculation evolved. It is no longer needed as the high tax rates and tax shelters are gone.
A second thought......many people don't like what we have now but compared to the way it was, we now exist in a flat tax world. (It is all relative)
The amt tax was put into place when the tax rates were as high as 70% and there were a lot of tax shelters to counter the high tax rates. To counter people paying no taxes a SECOND tax calculation evolved. It is no longer needed as the high tax rates and tax shelters are gone.I agree it is no longer needed and probably wasn't to begin with, but the dumbest thing they did is not properly index it for inflation. That's just stupid. (Or, more likely, it was a stealth tax increase.)
ping
Thanks for the ping. AMT is easily the most complex and ignorant tax law on the books. It needs to be abolished immediately. Virtually every major deduction is tied to AMT, and they all have different rules and limits and reductions. Maybe this insanity will end.
A bit surprising, but I am not shocked. The fairtax numbers will calculated by paid for whores. I have no respect for any of the fairtax experts. Their numbers were so transparently flawed.
Which shows that the government is spending way too much money, which we already knew. But using that as a basis to attack a national sales tax is just shooting the messenger.
Which shows that the government is spending way too much money, which we already knew.Agreed.
But using that as a basis to attack a national sales tax is just shooting the messenger.But the messengers (the AFT and the FairTax supporters) aren't telling a truthful message. Maybe they deserve to get shot (metaphorically).
Which shows that the government is spending way too much money, which we already knew.But using that as a basis to attack a national sales tax is just shooting the messenger.No it isn't. The replacement/revenue neutral rate has nothing to do with spending. They are ALL spending more than they're taking in anyway.
Removing a group of taxpayers from paying taxes (businesses and corporations) is the reason for the higher rate...spending is another issue.
Where does the money come from which business uses to pay taxes? From individuals.
Taxing business is a hidden tax on individuals. But you like it that way.
Taxing business is a hidden tax on individualsOnly when I buy their products/services...I like it that way.
GM is reporting losses. How much of their income tax will be "imbedded" in their losing proposition of employee discounts for everyone?...
Speaking of that, can you explain how eliminating the tax GM won't be paying would lower their prices an additional 20+%...I didn't think so.
BTW before you get too juiced up about defeating the FairTax or buying the figures wholesale as put of by the Panel staff, you might look at the Panel paper called "Benefits of Tax Reform" and explain how your favorite Nightmare Flat/VAT notions stand up ...
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"BENEFITS OF TAX REFORM
Do we need a tax law and regulations that are almost 20,000 pages long and at least 10 million words?
This is 10 times longer than the Bible, and longer than the complete works of Shakespeare.
Is it fair that more and more Americans have to hire professional tax preparers because they cannot understand the tax law and they are afraid of being punished if they make a mistake?
Do we need a tax system that discourages growth, innovation and productivity of American businesses?
SIMPLER
# Reduces the number of lines on the tax form so that Americans don't have to spend as much time filling out forms.
# Reduces the number of pages in the tax law so that it is easier to understand.
# Americans will spend less time filing, keeping records, talking to the IRS, and doing their taxes, so that they can spend more time with their families or doing what they want.
# Fewer forms and simpler instructions mean: less hassle, less agony, and more free time.
# Simplifying the tax law will eliminate the fear that many Americans have of making a mistake and being confronted or audited by the IRS.
# Fewer Americans will have to pay an accountant or buy software to prepare their taxes.
# Americans won't feel like they are "missing out" on deductions/credits that they are entitled to.
# Americans deserve a reliable tax system that doesn’t change every year.
FAIRER
# Americans who play by the rules should feel confident they and their neighbors are all paying their fair share.
# Eliminates loopholes that some taxpayers use to avoid paying taxes.
# Makes the tax system more transparent, so Americans understand the tax system and their tax obligations.
# Americans shouldn't be forced to make decisions about how to manage their money because of the tax system.
# Removes the hidden tax hikes and gimmicks, such as the AMT and the phase-outs of family tax benefits.
ECONOMIC GROWTH AND JOB CREATION
# Reforming the tax system helps the economy, and at the end of the day, that is like getting a pay raise. If the GDP increases by 3%, it’s like getting a 3% pay raise.
# Simplifying and increasing savings opportunities, promotes economic security and helps Americans realize their dreams.
# The tax system should not discourage innovation and productivity.
# Small and large businesses are powerful engines of growth in our economy. Allowing businesses to keep more of their profits will allow them to expand their businesses and hire more employees.
# Encouraging investment allows companies to grow and create more and better paying jobs.
# Updating our antiquated international tax system makes it easier for American companies to do business and be more competitive internationally."
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I really don't see much there that qualifies either of your "plans" (which aren't anything but hypothetical theories anyway). Or for that matter much that qualifies any "real" Flat or VAT. It surely isn't surprising that the panel would say "deep six" the AMT if you looked at some of the horror stories in the Comments to the Panel. That makes the cheese a bit binding for them with revenue neutrality on the platter. We'll see how the FairTax shakes out in the peanut gallery before too long and I think you may be surprised. If I were you I wouldn't put too much credence in the Panel's staff figures.
Not to worry, though, Nightie, the real - FairTax supporters will just keep on working away until it passes - despite the efforts of guys like you. Most of us know how beneficial it would be for the country even if you don't.
Glad you guys agree about getting rid of the AMT so you won't be too blue when we get rid of it along with income and payroll taxes, etc. with the FairTax.
Oh, and BTW Nightie in your #1 post, why throw in the comment about the artificially inflated FairTax rate not including payroll taxes??? The FairTax doesn't tax payroll - but I thought you knew that!! Just trying for another "hit" I guess.
The staff is no doubt playing the old liberal trick of shrinking the base to inflate the rate ... which you've tried to do several times yourself on these threads. We'll eventually see their basis for calculations and see just what their bias might be. After all, there are many more economists that have looked at the FairTax and endorsed it - or have you forgotten about the 75 that sent the letter to the Prez and Congress backing the FairTax?
Always Wrong, I doubt that you'd recognize a "paid for whore" if one bit you on the toe.
You think the 75 economists endorsing the FairTax are from the Mustang Ranch???
I paid about 9% FIT (not inluding FICA et al) last year - the day I am hit with AMT, I quit.
"It is no longer needed as the high tax rates and tax shelters are gone."
That depends on how you look at it. The way the wealthy shelter their income now is to set up foreign corporations and sidestep the US tax system altogether. Who needs tax shelters in the Code when you can do that?
"Most of the discussion today was about reforming the current system. There was not a lot of talk about radical reform."
Guess that means the Nightmare tax is out, then.
:-(
Oh, and BTW Nightie in your #1 post, why throw in the comment about the artificially inflated FairTax rate not including payroll taxes??? The FairTax doesn't tax payroll - but I thought you knew that!! Just trying for another "hit" I guess.I guess your grief has left your stupefied. I didn't say the FairTax taxed payrolls, I said the 34% tax rate (25.4% inclusive) Treasury arrived at was for replacing the individual and corporate income taxes only, not payroll taxes. If a NRST were to replace payroll taxes like the FairTax proposes, the rate would been even higher.
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