Congress Cracks Me Up!
Take for instance, the news that the Alternative Minimum Tax (AMT), which was about to ensare 21 million "rich folks" this year has been patched, once again. The "rich folks" I talk about actually could be single and making $40,000 a year and get hit by a tax meant originally to punish millionaires.
Congress' fighting about the fix is over the idea of "income replacement", to congress, for fixing a tax they screwed up in the first place.
You see, the AMT was designed to make wealthy folks in the late 60's pay taxes when they sheltered income. Congress, with it's usual lack of foresight didn't index it to inflation. Now, suddenly it's getting ready to hit millions this year and Congress has decided to fix it.
Here's the problem, Congress like money, even money it's never received, like the billions that the AMT would garner them next year. So Democrats decided that all the income they wouldn't get (and don't currently have) from the tax hit should be replaced by taxing someone else.
Luckily, fiscal conservatives hauled up the BS flag, and tried to get Democrats to explain why they needed to replace income they weren't currently collecting from the tax. In the end, as they've done on everything else, the Democrats caved in.
Rep. Jim McCrery of Louisiana put the fix into perspective; "It is not necessary to enact a tax increase in order to prevent another tax increase."
Democratic assertations that to abide by the Pay-Go plan they passed (but have ignored often already) they have to increase other taxes is a steaming pantload of something. You see, Pay-Go was designed to offset current revenue losses created by tax cuts or spending increases. What the AMT fix does is prevent a future tax increase, not lose current income.
The fight illustrates why the entire tax code needs to be fixed. Annual patches to keep one tax break (or hit) from expiring, expanding, etc. is proof that the system is broken.Read The Full Post!