Trump wants to eliminate middle class-killing AMT
WASHINGTON, December 9, 2016 – As we’ve noted many times before in this column, official Washington, through its smugness, obtuseness and irritating condescension ultimately chose the form of its Destructor, and his name turned out to be Donald Trump, now President-elect of the United States.
Since winning Election 2016, Trump has kept up a steady drumbeat of cabinet level appointments, economic pronouncements and provocative tweets that has professional Washington and the media in a tizzy—something that’s likely to remain his style over the next four years as he attempts to unwind the disasters of Obamanation just as fast as he can.
In addition to his allegedly provocative cabinet appointments—which are generally being greeted by popping champagne corks on the conservative side—Trump is threatening to upend even America’s byzantine corporate and personal tax codes. Even partial success in this area could finally release this country’s long pent-up animal spirits when it comes to corporate innovation and job creation. The predictably left-wing media clowns are throwing hissy fits, dropping to the ground like fainting goats at each fresh Trumpian outrage.
To paraphrase a classic line often delivered in World War II movies, “Trump’s ideas are so crazy, they just might work!” (In all honesty, anything might work now that Obama’s economic script, apparently lifted intact from the Little Lenin Library collection, are being consigned to the dustbin of history.)
Among Trump’s current economic policy trial balloons is his stated intent to dump the widely hated Alternative Minimum Tax (AMT). According to a CNBC report,
“President-elect Donald Trump wants to scrap the 47-year-old tax, which was originally meant to assure the rich don’t avoid paying their fair share, but which now hits more than 4 million taxpayers a year. Most are middle-class folk who’ve never tapped a trust fund in their lives.
“‘It was originally targeted at the super-wealthy when it came out, but the super-wealthy in most cases don’t pay it,’ said certified public accountant Scott M. Aber, owner of his eponymous accounting firm in Rockland County, New York. Despite the original intent of the tax, the super-rich now typically pay more in regular income tax than they would under AMT, so the AMT has evolved into a surtax on the middle and upper middle class.
“Taxpayers with lots of itemized deductions must figure their tax returns twice and pay whichever is higher: the AMT or their regular tax. The AMT denies deductions for things such as dependents and payments for real estate and state taxes….
Even worse, notes the report,
“While there are many strategies for reducing tax on the regular return, there is not much one can do to wriggle free of AMT. Declining to deduct your dependents or take credit for a big state tax bill, for instance, could just produce a regular tax even higher than the AMT.
“‘The AMT does often come as a surprise to many taxpayers who end up being subject to it,’ said Dave Du Val, chief advocacy officer at TaxAudit.com, a tax advisory service in Citrus Heights, California. ‘Because AMT is a tax system that runs in parallel with the regular tax system, there is no way to determine if a taxpayer is going to be hit with AMT just by looking at their documents [like] W-2s and 1099s,’ he said.
“‘With the exception of increasing withholding to cover the taxes, there is little a taxpayer can do to prepare for the AMT,’ he added.”
Alas, the usual suspects—generally traditional tax-and-spend Democrats and some Republicans—are already weighing in against the potential move, claiming it would seriously deprive the Federal government of much-needed revenue.
It probably would. But so much of Federal revenue these days is wasted on bureaucracy and giveaways that it likely wouldn’t make much difference in the end, particularly if parts of the bureaucracy would be cut—something earnestly desired by the incoming President and by most American businesses as well
In Friday trading action, it’s clear that Wall Street is continuing to eagerly devour whatever economic news Trump is dishing up on any given day. After Thursday’s wishy-washy but upbeat trade, Friday’s return to high spirits currently has the Dow up 103 points (+0.53 percent), standing at a lofty 19,719.85 as of 3 p.m. EST as the widely followed industrial average heads for a showdown with the 20,000 point level—unthinkable even a few months ago. UPDATE: The Dow closed at 19,756.85, up 0.72 percent.
The other major averages are making similar moves across the boards. Even the badly damaged healthcare and pharmaceutical sector is attempting at least a half-hearted recovery.
Monday is likely to give us another swan dive as markets correct, once again, for overbought conditions. But what we may be seeing here, longer-term, is a genuine re-awaking of American capitalism as its long, 8+ year socialist nightmare appears to be nearing an end. Soros-paid socialist agitators—known in the discredited (formerly) mainstream media—will attempt to prove otherwise. But, as most voters proved on Election Day, real Americans are fed up with the nonsense and are ready to get this country back on its winning track for the first time in a long time, and stocks seem to be anticipating that spirit and resolve with a vengeance.
*Cartoon by Branco. Reproduced with permission and by arrangement with LegalInsurrection.