Posted on 04/22/2004 11:12:44 AM PDT by scripter
Most taxpayers should be worried when politicians claim that they only want to raise taxes on the so-called rich.
First, a question needs to be answered: Does it make economic sense to impose high taxes on high-income earners? After all, raising taxes on upper incomes effectively means raising taxes on economic success. Is that smart economics? In addition, upper income individuals are better able to make the investments that spur entrepreneurship and the economy forward. Hiking taxes on the “rich,” therefore, restrains business start-ups and expansions, job creation, and economic growth.
Second, we’ve had some glaring examples over the years of taxes that, when imposed, elected officials promised were only meant for the wealthiest people. Reality, though, turned out to be quite different. Most taxpayers wound up paying. While envy usually plays a part in proposing taxes on the wealthy, eventually government greed takes over so the taxes spread to most income earners.
The most obvious example is the income tax. When first imposed in 1913, the personal income tax was only supposed to impact the wealthy, and carried a top tax rate of 7 percent. We all know the subsequent story. Today, the income tax ensnares most everyone who works for a living, and the top rate is 35 percent.
The income tax also gave birth to the alternative minimum tax (AMT). After Congress discovered that 155 taxpayers with adjusted gross incomes topping $200,000 paid no income taxes in 1966, the individual AMT was imposed in 1969. The AMT was supposed to prevent the rich from avoiding personal income taxes.
Prior to 2000, the AMT impacted fewer than one percent of taxpayers in any given year, according to a report released on April 15, 2004, by the Congressional Budget Office (CBO). Guess what? The CBO also notes that the number of taxpayers hit with the AMT will accelerate quickly in coming years, and that by 2010, one in five – or 29 million -- taxpayers will pay the AMT. Forty percent of married couples will fall under the AMT in 2010.
The CBO points out that two-thirds of taxpayers earning between $50,000 and $100,000 will owe the AMT, and more than 90 percent of taxpayers with incomes between $100,000 and $500,000 will have an AMT liability. Are these America’s wealthiest? Hardly.
The AMT also presents problems for the economy in general. The AMT effectively increases taxes. And the positive impact of any tax relief is lessened. Tax complexity and costs skyrocket, as taxpayers have to calculate their taxes under what are, in reality, separate tax systems – the normal income tax and the AMT
A key reason why the reach of the AMT is expanding so markedly is because the AMT is not indexed for inflation. The CBO explained: “Indexation under current law prevents regular tax liabilities from growing simply because incomes keep pace with price inflation, but AMT liabilities have no such brake. As nominal incomes rise over time, more taxpayers become liable for the AMT.” So, with the AMT, a person can see absolutely no increase in real earnings, yet his tax burden actually rises.
Indexing would remove a big chunk of taxpayers from the clutches of the AMT – more than 80 percent of the projected 29 million in 2010. That would be a big step forward, obviously.
However, some 5 million taxpayers would still be left with higher taxes and increased costs under the AMT.
The National Taxpayer Advocate recommended repealing the AMT in its Annual Report to Congress for 2001. It reiterated this recommendation in its latest report released on December 31, 2003. The report stated: “The AMT is extremely and unnecessarily complex and results in inconsistent and unintended impact on taxpayers… the AMT is bad policy, and its repeal would simplify the Internal Revenue Code, provide more uniform treatment for all taxpayers, and eliminate the oddity of dual tax systems.”
The AMT is an ugly, costly and expansive tax. Repeal makes sense for the taxpayers, and for the economy.
Understood.
What's the NRST buy us in regards to eliminating the AMT?
Gone, repealed, fini, with the income/payroll tax sytem it is associated with, along with capital gains, and gift/estate taxes.
If you would like to be added to this ping list let me know.
John Linder in the House & Saxby Chambliss Senate, offer a comprehensive bill to kill all income and payroll taxes outright, and provide a IRS free replacement in the form of a pure consumption tax:
H.R.25, S.1493
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
So that Sam Johnson's amendment to the constitution has a chance at enactment & ratification:
H.J.RES.61
Title: Proposing an amendment to the Constitution of the United States to abolish the Federal income tax.
Sponsor: Rep Johnson, Sam [TX-3] (introduced 6/24/2003) Cosponsors: 5
Latest Major Action: 9/4/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on the Constitution.
Or Ron Paul's amendment:
H.J.RES.15
Sponsor: Rep Paul, Ron [TX-14] (introduced 1/28/2003) Cosponsors: 2
Title: Proposing an amendment to the Constitution of the United States relative to abolishing personal income, estate, and gift taxes and prohibiting the United States Government from engaging in business in competition with its citizens.
(But lets modified it to prohibit all income taxes as HR25 calls for, not just personal taxes.)
Better yet go here:
And take a look at the score cards for both House & Senate, if your Critters are waffling or not supporting the NRST let them know that it matters.
Time to put that stake in the heart of the income/payroll tax system and the IRS, and the National Retail Sales Tax bill HR25 is the way to do it.
It is long past time to end the Income Tax once and for all and get rid of the intrusive anal exam of family finances by government. Support the enactment of the bills before congress that would actually achieve that.
Billy Tauzin proposes a 15% retail sales tax that replaces all income taxes but doesn't touch SS/Mediscare payroll taxes:
H.R.4168
Sponsor: Rep Tauzin, W. J. (Billy) [LA-3] (introduced 4/2/2004)
Title: To promote freedom, fairness, and economic opportunity for families by repealing the income tax, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
John Linder in the House & Saxby Chambliss Senate, offer a comprehensive bill to kill all income and payroll taxes outright, and provide a IRS free replacement in the form of a pure consumption tax:
H.R.25
SPONSOR: Rep Linder, John (introduced 01/7/2003)
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.S.1493
Sponsor: Sen Chambliss, Saxby [GA] (introduced 7/30/2003)
Title: A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States.
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