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Kinsley Offers Criticism But No Solution to AMT Pickle

1 min readBy: William Ahern

In what he calls a defense of the Alternative Minimum Tax (AMT), Michael Kinsley in the Washington Post never gets around to telling us what lawmakers should do about it. Instead he contents himself with criticizing Senator Grassley for advocating repeal and President Bush for not having repealed it.

He makes one good observation though: “TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. deductions aren’t (or aren’t supposed to be) goodies distributed like candy on Halloween.”

That is so true, and the big piece of candy that Kinsley is talking about, though he doesn’t mention it, is the tax deductionA tax deduction is a provision that reduces taxable income. A standard deduction is a single deduction at a fixed amount. Itemized deductions are popular among higher-income taxpayers who often have significant deductible expenses, such as state and local taxes paid, mortgage interest, and charitable contributions. for state-local taxes paid. That’s the deduction that most commonly forces taxpayers’ regular tax liability down so low that they get caught in the AMT net.

Every sensible tax reform plan ever published has suggested repealing the state-local deduction, and if the House and Senate and the President could bring themselves to follow that advice, they would improve the tax system, and with the extra revenue they could could cut other taxes or repeal the AMT. Without a state-local tax deduction, hardly anyone would still be stuck in the AMT anyway.

Here’s a revenue-neutral plan we published that would do just that, and here’s a directory of useful info on the AMT.