Friday, April 20, 2007

Alternative minimum tax

As per an earlier post, Lee Sheppard was kind enough to quote me in her article in the 4/16/07 Tax Notes concerning the AMT. So why don't I repay the favor, or alternatively add to it, by quoting her.

"'Given how irresponsible the Bush tax cuts were, it is just as well that they were not all realized,' commented Daniel Shaviro of the NYU School of Law. 'We're paying for the Bush tax cuts in installments.'

"Shaviro's comment is important. The panelists agreed that, to a great extent, the revenue from the AMT is masking the true cost of the Bush tax cuts ...

"'Should we have just one tax system? Should we repeal the regular income tax?' Shaviro asked rhetorically. He emphasized that what matters is not what the system is called but what it looks like. [Note: This is my rebuttal of Michael Graetz's in my view misconceived talking point about how we should repeal the regular tax rather than the AMT.] Shaviro pleaded guilty to having worked the technical aspects of the AMT while at the [Joint Committee on Taxation] during the 1986 tax reform. The drafters did not expect that the inclusion of personal exemptions, credits, and miscellaneous deductions in AMT preferences would become so important.

"'What do you do with the big items?' he continued. Shaviro, a Manhattan resident, argued that while personal exemptions, credits, and miscellaneous deductions should not be limited, there was a case to be made for the AMT's 'partial indirect repeal' of the state and local tax deduction. Other big items that require further consideration are the mortgage interest deduction and the exclusion for employer-provided medical coverage - both of which the president's tax reform panel had to propose cutting back to repeal the AMT and preserve the Bush tax cuts."

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