WSJ: Grassley's Head Start (on the AMT--the Fed's ATM)

Wall Street Journal ^ | May 25, 2005 | Editorial

[OESY]

Give Senate Finance Committee Chairman Chuck Grassley credit for enthusiasm. On Monday, he and three colleagues introduced a bill to repeal the hated Alternative Minimum Tax, well before President Bush's tax reform commission reports its findings in late July.

For readers unaware because they're lucky enough to live in low-tax states, the AMT is the parallel tax system designed some 35 years ago by Democrats to make sure the rich can't exploit too many loopholes. But because it isn't indexed for inflation it is sweeping up more and more middle-class taxpayers, especially in New York, California and other liberal states. As Mr. Grassley noted, "this should get Democratic support right off the bat because all of these people that are being taxed are in their blue states." And it's notable that Max Baucus, the ranking Democrat on Finance, and Ron Wyden of Oregon are co-sponsors.

We're all for repeal, though we'd also like to know what Mr. Grassley is going to get in return for doing Senate Democrats this favor. Are they going to help him pass a broader tax reform, one that lowers rates in return for broadening the base? Or short of that, how about making permanent the 15% dividend and capital gains tax rate that has helped the economy so much since it passed in 2003?

As a policy matter, Mr. Grassley would be better off waiting until the bipartisan Bush tax commission puts more reform options on the table. Then again, the Iowa Senator is a 100% pure-bred pol. For him to put AMT repeal on the table so soon probably means that tax reform is a livelier prospect than most observers have thought.

[OESY]

Attitude Check: But I thought blue staters felt a duty to pay high taxes? Isn't that why they're "blue".

[Eccl 10:2]

"As a policy matter, Mr. Grassley would be better off waiting until the bipartisan Bush tax commission puts more reform options on the table."

It's never a bad time to talk about tax cuts, esp this one. It's a good opening salvo to get some momentum going. Kudos to Grassley - unless I'm missing something.

[Paleo Conservative]

Keep the AMT, but make it the flat tax. Anyone who wants to continue using the old system with its deductions and credits is free to do so, but most people would be better off with the flat tax.

[The Great RJ]

Radio ads have been running here by a "non partisan group" supporting the retention of the "death tax" a.k.a estate tax. In the ad a couple discusses why it is so unfair that millionaires and billionaires "who didn't pay any taxes in the first place" can transfer their assets to heirs tax free on death and that with the cost of the Iraq war we need these taxes to support social programs at home.