Wednesday, February 7, 2007

New Taxes? Sure! Honesty? Well.....

Well written in today's (Feb. 7) Washington Post, Ruth Marcus hits the nail on the head with the difference between what President Bush says and what really happens. Tax Cuts? Alternative Minimum Tax? Who's paying the bills? Bush's new budget proposal is supposed to provide a balance budget by 2012. The AMT is the cash cow that makes it possible. Tax Cuts for the wealthy and corporations? Yes! New higher taxes for the middle class Yes! Whatever happened to "No new taxes?" Here's a highlight:
"The AMT, as you may have had the misfortune of discovering, is hitting growing numbers of taxpayers who are further down the income scale. That's because (1) the level at which it takes effect isn't adjusted for inflation, so more taxpayers find themselves covered over time and (2) the Bush tax cuts lowered regular income tax rates, sweeping additional taxpayers into the alternative system.

Figures compiled by the Urban Institute-Brookings Institution Tax Policy Center demonstrate the AMT's dramatic effect. If nothing is done to fix the AMT and the Bush tax cuts are extended as he wants, 89 percent of married families with two or more children and incomes between $75,000 and $100,000 will be hit by the AMT by 2010 -- compared with less than 1 percent in 2006. By 2017, almost half of all taxpayers -- 53 million -- will owe the AMT. The tax will hit two-thirds of those making between $75,000 and $100,000 and 90 percent of those making $100,000 or more.

Looked at another way, what the Bush tax cuts give to taxpayers, the AMT grabs back. By 2012, if it isn't changed, the AMT would take back almost one-third of the Bush tax cuts. would take back more than half of the tax cut for people making between $100,000 and $200,000.

That leaves the middle class, the better-off and corporations to divvy up the tab. In that context, does it really make sense to permanently repeal the estate tax? To leave in place lower tax rates for the richest Americans? To continue to tax capital gains and dividends at far lower rates than ordinary income? These are the choices that the Bush budget entails, even if it fails, deliberately, to spell them out."

Of course our delusional DNR editor offers in this morning's editorial that it certainly is the divine right of corporations to make mega-bucks and huge profits that seem to stoke his view that the economy is just fine thank you. Ms. Marcus seems to be answering the editorial today pointing out that what's rosy to some is higher taxes and financial insecurity to others.

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