Over at Slate, Daniel Gross is explaining, once more, the role the Alternative Minimum Tax continues to play in the Bush administration’s deceptive tax policies.
The AMT is a bizarre parallel-universe of taxation with its own set of complex rules that differ from the normal IRS system. It was passed decades ago as an effort to prevent gazillionaires from using elaborate tax shelters to reduce their tax bills to zero. For many years it was easily ignored by the vast majority of Americans, and as recently as a few years ago the only non-super-rich people who worried about it were tech-industry types who’d hit the stock-option jackpot but played their cards wrong.
But the AMT was designed with its very own time-bomb: It was never indexed for inflation, and so each year the rising tide of inflation — even the slow, relatively benign inflation the U.S. has experienced in the last decade — lifts more and more middle-class Americans into its maw. The obvious answer is to fix it, either by repeal or by indexing it for inflation so it continues to apply only to the gazillionaires who were its original target. Shouldn’t be so hard, right?