Byron's Blog

Anonymous wonders if other Americans are livid about the prospect that the government is going to be late returning your money to you because Congress has been tinkering with a tax that punishes people who work hard and get ahead.

Legalized Theft

by Anonymous

There's a story that's been floating around in the financial press for months, that's now just starting to make it to the popular media. It's all about one rotten aspect of the I.R.S. code known as the Alternative Minimum Tax. Kind of an innocuous name that seems to imply the government's seeking a minimum amount of tax from you. It's exactly the opposite.

The Alternative Minimum dates back to 1969, when Congress passed it to collect booty from 155 families. Seriously 155, that's it. These were the richest in America and leaders felt it was high time the government raid their bank accounts. Today, 23 million Americans pay the A.M.T. What happened? The bumbling, stumbling, goofs who comprise much of the House and Senate forgot to index the thing that's now swallowed up billions and billions of dollars. Whoops!

That A.M.T. monster was never supposed to punish all those millions of people, but it does. The tax kicks in now for families that earn about $210,000. No big deal you say? Go ahead, soak the rich. They've got the money and they're not doing anything important with it. Sure they may want to pay college tuition for their children, invest it to create capital formation which enables firms to expand and employ people, or even save it to increase liquidity so that others who want loans can -- say, buy homes at affordable rates.

Oh yeah, another happy thought. That $210,000 threshold keeps getting lower. Next thing you know, families in the $175,000 dollar range will pay it, then those who earn $150,000 and before you can say, 'repeal the tax' maybe millions more will get to pay, maybe even you. Hooray taxes!

Another point. The tax is arbitrary, which makes it unfair, but what's new about that. The tax code itself is unfair. Say you're a couple and you live in Manhattan. Sure, you're pulling down $220,000, but what does that get you. The answer is, not much. That $220,000 in Greensboro, North Carolina means you may actually be on the wealthy side, but the tax code does not differentiate between. Neither does the A.M.T.

None of this matters to money hungry Congress Members, who simply cannot figure out how to live within their means and a President who's signed off on every bloated budget they've passed. The head of the clout heavy Ways and Means Committee compounded this tax mess by proposing this novel idea -- eliminate the A.M.T. and replace it with a tax increase. That bit of brilliance came from the sometimes barely functioning mind of Representative Charles Rangel, Democrat from New York, whose plan emitted the foul stench of a bad scheme that proposes to fix a problem by causing another. Congress -- hard at work.

Weeks of foolishness and wasted time resulted in a patchwork plan that basically left things the way they were, except for one thing. Your friends at the I.R.S. announced that it would take two and a half months to adjust their computers to account for all the rigamarole and the end result would be late tax refunds. Now, the kicker. All this wrangling means that $75 billion in refunds will be tardy, returns not only to people who earn six-figures, but also to low income wage earners. Those same Democrats who say they're working for little guy actually stuck it to them. Way to go, Democrats. Thanks again.