Trillion Dollar Baby Monster
The Opinion Journal rips into Charles Rangel's trillion dollar Mother of all tax increases. The largest tax hike in American history. They have rather a lot to say about it - including the fact that there is no chance of it passing this year. But it sure indicates what will happen in 2009 if the Democrats win Congress and the White House. Worst of all, it is a smoke screen to cover the Democrat's role in the Alternative Minimum Tax, a Frankenstein's monster enacted by Democrats to soak the rich that now is devouring the middle class.
All of this is done in the name of tax "fairness," but it's hard to see how this would make the U.S. code more equitable. Millions of those who'd receive the tax credits already pay no income tax, so they would merely be getting another government subsidy. The group that gets slammed hardest is the entrepreneurial class. Tax Foundation data show that three of four taxpayers in the highest income tax bracket are small business owners or farmers. If Mr. Rangel's plan ever becomes law, look for millions of Americans and small-businesses to "incorporate" themselves so they can pay the lower corporate rate. Previous tax reforms have tried to keep the corporate and top income tax rates equal precisely to avoid this kind of tax gaming.
We sympathize a little with Mr. Rangel, whose bad luck has been to take over his tax chair just when the AMT is becoming the tax that ate the middle-class in the high-tax "blue" states of New York, California and New Jersey. Democrats are desperate to avoid blame for this, even as they've boxed themselves in with their "paygo" promise to offset every tax cut with a tax increase or entitlement spending cut.
Remember, the AMT was enacted by the Democrats because a couple of dozen very rich people had avoided - legally - paying any income tax. But because the Democrats have steadily revised what constitutes "rich" downward, the AMT is hurting more and more people. Give that history, how long do you think it will be until Rangel's trillion dollar monster runs amok and further destroys the middle class?
