When George Bush's tax cuts of last year expire in 2010 -- those
cuts that top Democrats insist should die rather than live past the cutoff
date -- 36 million taxpayers will be paying the "alternative minimum tax," a
levy contrived in 1986 to make sure everybody pays something. Likely a
distinct minority of Americans is aware such a tax exists. Ahem -- brace for
the knowledge that bites.
This joyful forecast comes from a new study by the Urban
Institute and the Brookings Institution, neither one known as a constituent
member of the vast right-wing conspiracy.
At the point the alternative minimum tax reaches out to ensnare
the middle class, deductions start to disappear -- poof! Deductions for
children, for individual filers, and for state and local taxes, among other
things. Tax rates reach 26-35 percent. According to the study, 97 percent of
two-children families with incomes between $75,000 and $100,000 will qualify
for the alternative minimum tax by 2010. They will lose 18 cents of every
dollar in the Bush cuts if they earn between $50,000 and $100,000, 42
percent if they report between $75,000 and $100,000.
So Congress steps in to amend all -- would that be a fair
assumption? A tricky one, actually. The alternative minimum tax, in 2010, is
expected to raise $141.4 billion (vs. $1 billion in 1986), which is a chunk
of change to renounce without replenishing it from some other source. Or
cutting spending, but let's get serious.
The obvious alternative is to stick it, once more, to the
"wealthy." That would seem an appealing notion in the age of greed and $2
million company-financed birthday parties for CEO wives, a la Tyco and
It would also be, at minimum, an evasive notion.
The "wealthy" have caused all this consternation? Horse
feathers! The cardinal sin of envy, exhibited in the context of democratic
politics, has caused it -- and seems likely to prolong the performance to
Sigh. A decade or so ago, post-Ronald Reagan, there seemed some
prospect of overhauling the tax code and eliminating its distortions.
Reformers batted back and forth two ideas: a flat tax and a consumption tax.
Either was clearly preferable to the progressive income tax, whereby we
pretend to be allotting everyone his fair share of taxes, except that the
system is ventilated with loopholes, "incentives," deductions, credits and
such like. Nobody understands the tax code. Were there no tax code, half the
certified public accountants in America would be working in teller cages or
studying the viola.
The progressive income tax, whatever the intentions of its
original proponents, works to excite envy. Envy means wishing you had
something that rich guy across town owns or wishing, alternatively, that
fortune would take him down several pegs.
Envy is ugly. It is also exquisitely human. This is why the
progressive income tax won't go away. Its ugliness makes humans smile. And
if they are slow to smile, a certain kind of "populist" politician is at
hand to remind the underprivileged how privileged are those folk with large
cars and jewels, paid for out of checking accounts. And how crooked and
selfish most of them are! All those stock options! Those mega-houses!
Democrats, who like to pose as the champions of the downtrodden
(remembering how many downtrodden votes are out there) are especially adept
at tax-code demagoguery. Aren't they, Sen. Daschle?
The tax code, it seems, will give us conniption fits until envy
dies out, and envy, engrained in our nature, is going no place. Editors know
at least how they will fill their columns for decades to come, long after
Saddam is history. There will be reports of the tax system's impending
breakdown; congressional Democrats will emerge to throw rocks --
rhetorically speaking -- at passing limousines. Tax reform will be proposed,
will falter and will give place to quick fixes and occasional cuts that
Democrats will denounce as giveaways to the wealthy. One thing about this
sterile and depleted terrain: It will seem very much like home.