KILLING THE AMT
March 5, 2007
By 2010, more than 30 million will pay the Alternative Minimum Tax (AMT), and over time, if it isn't amended, it will be paid by 70 percent of all taxpayers by 2050. Reform is needed now, says columnist John F. Wasik.
Some major reforms to consider:
- End tax write-offs for energy producers which give away at least $13 billion to the most profitable entities on the planet; one industry shouldn't be targeted, though, all corporate write-offs should be examined.
- Regulate offshore tax shelters which help corporations avoid paying U.S. taxes on as much as $87 billion in income every year, almost a third of the amount that the government expects to collect in corporate income taxes for fiscal 2006.
Beyond taxing corporations, there are other solutions, says Wasik:
- Lower the "tax gap;" the U.S. Internal Revenue Service estimates that individual taxpayers underpay by some $290 billion.
- Keep the AMT at its 2006 threshold levels, and count dividends and capital gains in the alternative-tax calculation.
- The Washington-based Citizens for Tax Justice estimates these two measures would cost the U.S. Treasury some $33 billion over the next four years, far less than the $250 billion cost of simply extending the 2006 AMT tax relief.
An even simpler solution would be to restore personal exemptions and adjust them for inflation. Combined with trimming some of the corporate-welfare loopholes, the Treasury could break even with the creative adjustment of the AMT.
Source: John F. Wasik, "Alternative Tax Is Like Killing the Swamp Thing: John F. Wasik," Bloomberg.com, March 5, 2007.
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