NYT editorial: Bush "Future Tax Shock" will hit upper middle, but not multimillionaires

[DeepModem Mom]

Future Tax Shock
Published: October 29, 2006

One of President Bush’s be-very-afraid lines this campaign season is that Democrats, if elected, will raise taxes. What he doesn’t say is that if you are one of tens of millions of Americans who make between $75,000 and $500,000 a year, your taxes are already scheduled to rise starting next year — because of laws that Mr. Bush championed and other actions he failed to take.

The higher taxes stem from the alternative minimum tax, a levy that is supposed to snare multimillionaires who would otherwise get away with using excessive tax shelters to wipe out their tax bills. But these days, the alternative tax is snaring many upper-middle-income filers.

Mr. Bush set the trap in 2001 — and in 2003, 2004 and 2006. In each of those years, he flogged for new tax cuts without requiring corresponding long-term changes in the existing rules for the alternative tax....Mr. Bush said he would vanquish the problem through tax reform. Didn’t happen. Congress never wrestled with lasting solutions. The truth is, the president and lawmakers are paralyzed. To fix the alternative tax while keeping the Bush tax cuts on the books would result in the loss of some $800 billion in revenue over 10 years, blowing a hole in the federal budget and exposing how utterly unaffordable the tax cuts of the last five years really are.

The taxpayers wrongly afflicted by the alternative tax are not tax dodgers. For the most part, they are couples with children who have broken into the ranks of six-figure earners, and who live in high-tax states like New York and California. They are being penalized, in effect, for claiming everyday deductions — like write-offs for dependents and property taxes — which, under the alternative tax rules, are viewed as excessive shelters.

Meanwhile, multimillionaires are not being snared at nearly the same rate as other filers. In part, that’s because much of the income of the superrich comes from investments. The tax breaks for investments — the grail of the administration’s tax-cutting crusade — are not counted as shelters under the alternative tax the way, say, children are....

http://www.nytimes.com/2006/10/29/opinion/29sun1.html?em&ex=1162270800&en=e57a447a76de6f91&ei=5087%0A

[leftchick]

1. the folks with the McMansions

who think they are "wealthy" but are in debt up the ying yang. Most of whom that I know vote repug.

[havocmom]

9. But, with a DEM majority in Congress when it hits, guess who gets blamed?

They won't think back to the fack that the GOP did it to them. They will blame the sitting congress when their rates go up.

We have some educating to do between now and then to raise the awareness of who did what to whome ;)

[smirkymonkey]

2. Kicked & Recommended.

This bracket is where a lot of GOP support is. They think they are the "rich" but they have no idea that they aren't even close to what W and his ilk talk about when they refer to the "elite". These are the people who are going to have a rude awakening in a few years when they realize they have been taken for a ride by the GOP.

My sister and her husband make around 500K annually and they think their income is being "protected" by Bush and his administration. Little do they know...

[Spinzonner]

3. So ? Sell the kids

:sarcasm:

[givemebackmycountry]

4. K&R for Ye and off to the front page!

nominated

[Brundle_Fly]

5. READ MY LIPS

[Olney Blue]

6. My husband and I are two-income empty nesters- we had to pay

the AMT last year, and it was a shock. There was a story about it on 60 minutes a while back.

K and R.

[papau]

7. Investments must be taxed at the same rate as wage income, except for IRA

and other pension assets.

The Payroll tax must remove the wage cap and tax all income, including investment income, picking up the investment income piece in the section of the IRS Form 1040 that already deals with Social Security/Payroll tax adjustments for over paying the payroll tax (a compromize I do not like is tying the wage cap to the Pension Law - ERISA - cap on pensionable earnings - this year at $220,000. But the real reform is to include investment income in the calculation).

Only then will we be able to discuss tax rates and just how prohressive those rate should be.

Today the vast majority of the income of the rich - the investment income - barely gets taxed, if it does get taxed. To discuss a flat tax in this current situation is to rub salt in the class warfare wound cause by the war of the rich on the non-rich.

[BlueEyedSon]

13. yeah, and the return of a 90% bracket

[pushycat]

8. Another good reason to vote Dem. We can fix this mess with

real solutions that help and don't punish lower income levels. The AMT should have been adressed along with the tax cuts - bad leadership all around.

[papau]

10. a simple increase in the AMT standard deduction ends the problem -the

AMY tax rate is already lower than the regular FIT rate and needs no adjustment.

The other adjustments that are needed are on mortgage loan interest limitations and inclusion of the per kid deductions as part of the AMY rules you can exceed.

[indepat]

11. All freakin' upper middle income persons who are W fans & get hit by AMT

truly are going to get what they have earned and so richly deserve.

[brazil]

12. If the Dems need to raise taxes...

...they should make damn sure that the tax increases don't hit anyone but the top 2% of wage earners, and advertise this relentlessly.

They need to make it very clear in every discussion on the subject that the tax increases will only hit those who have not been paying their fair share.

They need to make a few points clear with numbers:

* Estate tax increase will only hit those who have taxable estates worth over $5 million
* Income tax increases will only hit those making $250K+ per year

Maybe those aren't the right numbers, but make it simple to understand and impossible for the GOP to obfuscate.

If they do this, they're going to be pretty immune to the cries from the anti-tax folk. It's hard to have sympathy for those earning half a million a year when their taxes go up 25%.

[progressoid]

14. Gosh, how did this happen? Oh well, no biggie.

As long as gays can't marry and we're fightin the terrists over there so we don't have to fight them here, all is well.

[applegrove]

15. Was it always the point to sink the middle class in the bathtub by

making them pay all the taxes... thus turning them into tax-haters too? Wasn't that the whole point of tax relief for the very rich? That and putting social security into the stock market was supposed to create Rove's 30 year empire. Where there are have or have nots. Nothing in between. And all the "haves" would then vote Repuke to keep from paying taxes.

[mrdmk]

19. This I have to agree with 100% about Mr. Rove's plan

The plan was to have people with investments in the markets would vote Republican to protect their investments.

[bleedingheart]

16. There are a lot of W voting morons who are going to get slammed with this

and I am going to laugh...

[ovidsen]

17. This is just criminal

On top of a bloated federal debt and trade deficit and sliding wages and rising health care costs and expensive energy...

He's offering THIS???

[TexasLawyer]

18. kick n/t

[ozymandius]

20. Bush says Democrats will raise "your" taxes.

He is talking to the people who escape the AMT through substantial investment income, the kind that is barely taxed. Otherwise, this rhetoric is intended to frighten those who Republicanism has targeted for elimination all along. Frighten them, that is, into voting for more of the same abuse.