Several decades ago, it was discovered that sixteen people with incomes over one million dollars paid no tax on it. The result of this discovery was that the Congress created the “Alternative Minimum Tax.” People in the highest tax bracket had to hire an accountant to calculate their taxes under the regular tax code, and the AMT code, and pay whichever amount was greater. The only problem was that the AMT was not pegged to inflation. This has forced successive congresses to pass “patches” to keep it from affecting millions of current-day middle class taxpayers. For some reason, they’ve never gotten rid of it.
Recently, I read that over one thousand people who earned over one million dollars in income paid no tax on it. I guess that not pegging the AMT to inflation wasn’t the only problem with it, after all, if the number of million-dollar earners who paid no tax grew by around 7,000%. I don’t know what percentage of all US million-dollar earners those 16 people were all those decades ago, but the thousand or so today make up less than three percent of that population. In fact, the average tax rate on that group today is somewhere between 27 and 29 percent, according to the IRS.
I have to laugh all the farcial presidential rhetoric about “making the rich pay their fair share,” especially when he trots out Warren Buffet to say “tax me more”! This is a man whose core business is built on avoiding the payment of taxes! If the President and the Congress want to actually fix the problem of million-dollar earners paying no tax, here’s an idea. Have the nice people from the IRS come in and explain which tax “loopholes” these people are using, and close them.
Of course, that’s not what happened in the past with the AMT, and not likely to happen today, under this president. Instead, he proposes “carpet bombing” all wealthy Americans with a higher tax burden. Many of these people are the backbone of the US economy, small business owners, and others are senior executives at many mid-sized corporations, and junior executives at most large corporations. Remember, this president is classifying people who make two humndred thousand dollars a year as “millionaires,” which is only the least of faults with his plans. Most of these people already pay a higher tax rate than middle class taxpayers, and inflation has made that income bracket “middle class” in places like NYC and parts of California. It’s the 1970′s all over again, in more ways than one, under this president.