May 04, 2007

More Baloney on the "Clinton AMT"

Not to beat a dead horse, but anti-taxers keep piling on with this idea that the impending AMT mess is President Clinton's fault. (The real answer, as I note here, is that the inaction of Congress over the past 20 years, and the 2001-2003 federal tax cuts, are actually to blame.)

What makes this such a clever (and complicated to disprove) thing for anti-taxers to claim is that Clinton did spearhead changes in the AMT in 1993, and that one of those changes involved increasing the AMT tax rate. If your description of Clinton's AMT tax changes starts and ends there, you're gonna make it sound like Clinton actually is to blame. But the reality is that Clinton's 1993 changes did two other things as well:

1) increased the regular income tax rates;
2) increased the AMT exemptions.

And each of these two things actually decreased the number of people owing the AMT. Net impact of the three Clinton AMT-related changes? A decline in the growth of the AMT, as the Tax Policy Center demonstrates here. But again, if you don't tell the whole story you can make Clinton sound like the bad guy.

So here's Grover Norquist, who somehow convinced the usually-good Tax Notes to let him publish this under the tactful heading "Viewpoints":
The debate on the AMT will be helpful to taxpayers. Where did the AMT come from? It was invented by Democratic President Lyndon Johnson and pushed as a class warfare, envy tax because a handful of Americans were not paying taxes despite high incomes — much of that flowing from laws that make interest payments on government bonds tax-free, which itself is a tax subsidy for big government. And later Clinton increased the AMT from 24 percent to 28 percent with the help of yes votes from such Democrats as . . . Rep. Nancy Pelosi, D-Calif., Rep. Charles Rangel, D-N.Y., and Reid.
As a first step, the taxpayers’ movement should demand that the Clinton AMT be repealed.
See how he did that? Very clever-- and totally misleading. Not a word about the true causes of the AMT time bomb-- just pins it on Clinton. One can understand how informal observers of this debate would start to believe that black is white and night is day...


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