Dems' Trickle Down Taxes

Ellen of 1oth blames Kirk for the AMT. So here's AMT 101. The AMT---passed by the Dem Congress back in the day to punish a few, but now trickled down to the many. This is the Democrats' trickle down economics--trickle down taxes, now a wave that will encompass 25 million Americans this year, unless something is done. National Review:

The Alternative Minimum Tax was born in 1969, in a fit of populist indignation over the use of tax breaks by rich people and corporations to wipe out their tax liabilities. Rather than prune the tax breaks, Congress created a parallel tax code to make sure no one paid too little. Many taxpayers thus have to compute their tax liability under both the regular and the alternative code, and pay whichever is the higher.

In the alternative tax code, tax brackets are not indexed for inflation or wage growth. Since more and more people are rich by the dollar standards of 1969, more people pay the tax. Bush’s tax cuts have lowered many people’s regular tax liability to the point where they, too, must pay the AMT.

Obviously an evil Bush, uh Kirk conspiracy in the twisted mind of Ellen of !0th. Flying Debris handily dispatches Ellen. (Uh, Mark Kirk was in fifth grade when the bill was passed.)

But if you want to get picky, Ellen of 10th, you've got a bone to pick with our profligate Blue State Governor Blagojevich (who "runs" this tax and spend state, hmm?) The Dem-created AMT hits high tax states the hardest.

The Dem-led House has passed a bill not likely to get through the even the Dem-led Senate, as presently constituted. This flawed bill and inaction by the Do-Nothing Democrats is even giving the IRS fits (well, maybe that's a good thing, but not when refunds are on the line). WSJ:

About four million people had higher tax bills for 2006 because of the AMT. That number would jump to about 25 million people for the 2007 tax year if Congress doesn't pass a relief bill. Among those most likely to be caught by the AMT are people with large families who live in high-tax areas, especially New York City.

Congressional delays could affect people who file on paper as well as the growing numbers of people who file electronically. A record 57% of all federal income-tax returns filed earlier this year for the 2006 tax year were zapped electronically to the IRS. That was up from 36% in 2002.

And the bill right now is a bad one, increasing taxes by another $80 billion. Rep. Jim McCrery, Townhall:

The problem is Democrats’ so-called “paygo” rule, which ostensibly requires that a tax cut must be “paid for” with either a tax increase or a spending cut. In practice, House Democrats have shown zero appetite for spending cuts and have already raised taxes by over $100 billion this year. The paygo rule is flawed policy in a number of ways, but it has a particularly twisted effect when it comes to the AMT “patch.”

Everyone agrees that the federal government was never intended to receive AMT revenue from the middle class. Thanks to the “patches” that Republicans have kept in place since 2001, the federal government never has received AMT revenue from the middle class. But, according to the Democrats’ logic, maintaining this status quo – in effect, preventing a $50 billion tax increase – must be “paid for” with other tax increases. Thanks to this “Alice in Wonderland” application of their paygo rule, they are actually raising taxes to prevent a tax increase.

And didn't you know Ellen of 10th, the Democrats are the party of the rich now. (Doesn't Chelsea work for a hedge fund?)