To: Tenchusatsu who wrote (629831 ) 10/6/2011 1:15:25 PM From: TimF Read Replies (1) | Respond to Son of AMT? Economics Politics hoi polloi . It is being dubbed the “Buffett Tax.” I know that some are infatuated with “Saint Warren.” Not I. In fact, he makes me want to hurl. For those convinced of his sainthood, I suggest you look into his activities in silver in 1998. To me this looks like the Son of the Alternative Minimum Tax. Recall the AMT was originally devised in response to stories that Ross Perot and others had not paid any federal income tax because they had invested in municipal bonds and the like. This was deemed to be outrageously unfair–although well within the letter of the tax law at the time. So the AMT was sold as a means of ensuring that the plutocrats would pay some federal tax. Over time, of course, the program metastasized, and now catches millions of members of the definitely non-plutocratic class in its clutches. The “Buffet Tax” propaganda of today is eerily similar to the “Perot Tax” propaganda of twenty-odd years ago. Don’t be surprised if (on the off chance it actually makes it into law–see 4 below) this very “exclusive” tax will grow like Topsy. (If you take the time to deconstruct the AMT form, you will see that it is effectively a way of eliminating the lion’s share of any deductions.) To the extent that it is intended to be a tax on capital, it is a horrid idea. (Per the administration’s usual MO, few details have been released, and very few will be forthcoming.) Capital taxation is highly inefficient; we should be moving towards consumption taxes, not jacking up taxes on capital. And for those who think that capital taxes are a just way of stickin’ it to the man–think again. Retarding capital formation and distorting capital flows into tax-sheltered investments or into investments in jurisdictions that don’t tax capital as heavily reduces labor productivity and thus depresses wages. It is a great tax if your idea of cosmetic surgery is cutting off your nose to spite your face. It is highly likely that this is a purely political proposal that Obama knows has no prayer of making it into law.streetwiseprofessor.com
