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Bernard Madoff, convicted of running an $65 billion Ponzi scheme, was sentenced to 150 years in jail. What’s your take on his punishment?
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Gerald Prante is a staff economist at the Tax Foundation who specializes in the federal income tax at the federal level and property taxes at the state-local level. The Tax Foundation is a Washington-based nonpartisan tax research group.The Alternative Minimum Tax (AMT) has turned from a tax fairness device --ensure the very wealthy pay at least some tax -- into a Gordian knot of complexity that threatens to affect far more middle-income taxpayers than ever intended. Congress comes up with a temporary patch every year or two to keep it at bay. Congress hasn't made that fix yet for 2007, but is expected to before taxes are due, though failure to do so could force the AMT on more than 23 million people.
The debate over how to fix the AMT reflects the broader debate over taxes in general -- conservatives pressing for a system that taxes all incomes at the same or similar rates and liberals pushing for a progressive system that shifts more of the tax burden to wealthier taxpayers. Kiplinger Recommends is looking at the AMT issue by looking at two such proposals. The first was a conservative plan to flatten the AMT. This report is a look at a progressive plan by the Tax Foundation.
Just as the conservative plan seeks to use changes in the AMT to achieve broader tax reform (by flattening that tax and making it apply to more people), the Tax Foundation plan would seek to return the AMT to its original purpose and restrict it to the wealthiest Americans -- while cutting tax rates for more poor and middle-class taxpayers. There would be no increase in AMT rates, but popular deductions for state and local property. Income and sales taxes would be ended. And so would the exemption of income from municipal bonds. The foundation acknowledges there would be fierce resistance to ending such deductions --especially on local taxes -- but argues "the current state-local deductions really amount to a subsidy for high government spending in high-tax areas at the expense of taxpayers in low-income, low-tax areas. These deductions expand the education spending gap that exists between low-income areas, where few taxpayers itemize, and high-income areas, where most taxpayers itemize and take advantage of state-local tax deductions."
POSTED BY: Stephen McCrackin (August 21, 2007 09:30 AM)
Might I also suggest researchint the fair tax. It uses a sales tax to replace all income taxes. It also provides a rebate of about $180 per person a month to cover basic expenses, this also makes it progressive ie zero income pays a negative -1663 or negative INF. were a millionaire will pay right @ 23%. Conservatives will like it because everyone is taxed on what they spend.
POSTED BY: Todd (August 21, 2007 12:54 PM)
Politicians don’t need courage to eliminate the AMT – they need courage to finally let it descend upon everyone. The annual fixes to prevent millions from becoming enveloped in the AMT schema would end if they would finally let the rates apply one year to the masses. We’d all grouse, but finally, the AMT would become the defacto tax formula. The highest rate, which is lower than the middle two provides incentive to earn more, something the current tax code discourages. Maybe those politicians in 1969 knew what they were doing.
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