Rangel, who deserves credit for raising the issue of broad tax changes, proposes vast tax increases in order to eliminate the Alternative Minimum Tax. The AMT, originally designed to make sure that a few millionaires could not avoid paying income tax, has never been indexed for inflation, and threatens to engulf 20 million taxpayers next year unless Congress passes another one-year "patch" or, as Rangel wants, abolishes it.
The AMT has no deduction for state and local taxes, and tends to hit high earners in high-tax states like Massachusetts, Connecticut, New York, New Jersey, Maryland and California -- heavily Democratic states, you'll notice. These states tend to have highly paid unionized public employees, and their union leaders surely understand that the AMT threatens to create political pressure to lower state and local taxes and therefore spending. If voters can't deduct their state and local taxes, their tax burden will go way up, and they may start a tax revolt. Better not let that happen! So eliminating the AMT is an imperative for Democrats.
Looking ahead to future fiscal burdens, many people understand that Social Security, Medicare and Medicaid threaten to consume an ever-larger share of the economy over the years. But so do state and local governments if public employee unions get their way. And to get it, they rely on taxpayer's funds -- all their dues income comes from the public fisc.
Their goals are to increase pay, which runs counter to taxpayers' interests, and to minimize accountability, which runs counter to citizens'. Republicans are not their reliable adversaries -- union leaders get cozy with Republican legislators when they can, by letting them know they won't oppose them. But the Democrats are, with some few exceptions, their humble obedient servants -- from the young liberal bloggers up to the chairman of the House Ways and Means Committee.
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