Senate panel takes aim at 'stealth tax'

[Judi Lynn]

Senate panel takes aim at 'stealth tax'
Sun May 22, 2005 10:49 AM ET


By Donna Smith
WASHINGTON (Reuters) - It is called the "stealth tax" because most U.S. taxpayers are unaware of it, but in a few years, millions of people will pay the so-called alternative minimum tax that only the rich were supposed to pay.

The alternative minimum tax, or AMT, was enacted in 1969 amid reports that 155 taxpayers making more than $200,000, a tidy sum at the time, paid no taxes at all because of deductions and other income tax exemptions.

But what started as a tax to ensure that the wealthiest Americans did not escape paying federal taxes soon will hit more middle-class earners. This year, about 3 million people will pay the AMT and that will grow to 35 million by 2010 unless Congress acts.

A Senate Finance subcommittee opens hearings on Monday on the AMT in preparation for an expected tax reform push by President Bush. A White House commission charged with recommending ways to make the tax code simpler and fairer is expected to publish a report by the end of July.
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http://today.reuters.com/news/newsArticle.aspx?type=politicsNews&storyID=2005-05-22T144946Z_01_N22124899_RTRIDST_0_POLITICS-TAXES-CONGRESS-DC.XML

[Jane Eyre]

1. Paul Krugman predicted this in 2001

http://www.pkarchive.org

In short, the tax bill is a joke. But if the administration has its way, the joke is on us. For the bill is absurd by design. The administration, knowing that its tax cut wouldn't fit into any responsible budget, pushed through a bill that contains the things it wanted most — big tax cuts for the very, very rich — and used whatever accounting gimmicks it could find to make the overall budget impact seem smaller than it is. The idea is that when the absurdities become apparent — when mobs of angry junior vice presidents from New Jersey start demonstrating against the A.M.T., or when elderly multimillionaires develop a suspiciously high rate of fatal accidents — Congress will always respond with further tax cuts. And if the result of all those tax cuts is to prevent the government from ever providing the things Mr. Bush promised during the campaign, like prescription drug coverage under Medicare or increased aid to education — well, that was also part of the plan.