Alternative Minimum Tax: Will President Obama?s ingenious budget force Rs to defend the hated and outdated AMT?

[ProgressiveEconomist]

Alternative Minimum Tax: Will President Obama?s ingenious budget force Rs to defend the hated and outdated AMT?

IMO President Obama is brilliantly splitting merely very well-off Republicans from the kind of plutocrats who single-handedly own and control R politicians like Gingrich and santorum.

WHAT'S YOUR OPINION?

From http://finance.yahoo.com/blogs/daniel-gross/obama-amt-buffett-rule-combination-pits-well-off-184220767.html

"Obama AMT-Buffett Rule Combination Pits Well-Off Against Ultra-Rich
By Daniel Gross | Contrary Indicators

... As the budget message notes, Obama is 'proposing that the Buffett rule should replace the Alternative Minimum Tax, which now burdens middle-class Americans rather than stopping the richest Americans from paying too little as was originally intended.' In other words, Obama is proposing to stick it to a few hundred thousand extremely rich people for the sake of making life somewhat easier for tens of millions of people who may make $100,000 or more. ?

The Alternative Minimum Tax was created in the 1970s to try to prevent really rich people from taking massive deductions to avoid paying taxes. The thinking was relatively simple: Above a certain amount, people should pay a 28 percent marginal rate on income, regardless of the amount or number of deductions they've taken. So taxpayers must calculate how much they owe under the regular tax regime, and then calculate how much they owe under the AMT scenario, which limits the ability to deduct items like state, local and property taxes from taxable income. They have to pay whichever is higher.

Over time, as frequently happens, the tax aimed squarely at plutocrats caught up more and more people ? As the Tax Policy Center notes, "In 2011, 42 percent of tax filers with cash income greater than $1 million were affected by the AMT, compared with nearly 52 percent of those with cash income between $200,000 and $500,000.? ? Almost every year, Congress passes a "patch" that prevents the AMT from ensnaring vastly more people. Had Congress not acted, as the Tax Policy Center points out, in 2012, '45 percent of all tax filers with cash income between $75,000 and $100,000 will pay the AMT, up from 0.4 percent in 2011, when the temporary AMT fix or 'patch' is in place.'

For politicians, the AMT has become a double-edged sword. With each passing year, it gets more annoying to constituents and more expensive to fix. On the other hand, with each passing year the AMT brings in more revenues, which means it would be difficult to replace. So it's not surprising that the AMT hasn't been permanently "fixed." So, here's the deal Obama is proposing in this budget: Better and simpler tax treatment for millions of people in exchange for ensuring that a few hundred thousand others aren't able to use their resources and ingenuity to avoid paying a significant chunk of their annual earnings in taxes. It sounds like a winner."

[Lionessa]

1. Well I'll give him credit, he seems to coming out to the field

at the end of the field for a change instead of the 30 yard line. Hopefully this means he's learned that they'll try to negotiate everything away from him anyway so he may as well start boldly.

That said, I'll withhold any kudos till I see what he ultimately cedes and how far they yank him toward the other end of the field.

[ProgressiveEconomist]

2. 'What he ultimately cedes' You'll be waiting until

after the election, IMO. The only hard deadline I see for a possible deal with Rs is for a December renewal of the Bush tax cuts for those making under $250k a year. Spending bills likely will be continuing resolutions to keep Rs from shutting the government down. And IMO President Obama would LOVE to see the Rs shut government down to spare the 1 percent from paying their fair share in an election year.

IMO what election-year budget proposals do is win or lose support from various groups within the Democratic and Republican coalitions. An actual fiscal 2013 budget agreement between Democrats and Rs need not and likely will not occur.

[ProgressiveEconomist]

3. There hasn't been an actual budget agreement

since 2009, according to Alex Witt this morning on MSNBC

[Lionessa]

4. Like I said, we'll see how far he cedes.