Class-War Revelation

The Wall Street Journal also has an AMT (alternative minimum tax) article on tap today. We were happy to read some prominent Democrats have figured out that high-tax states, such as New Jersey, are disadvantaged by their “tax the rich” income tax philosophy and are now screaming for something to be done about the AMT. Unfortunately, New Jersey’s Senators Jon Corzine and Frank Lautenberg have yet to join the chorus.

Perhaps Senators Barbara Boxer (D-CA) and Chuck Schumer (D-NY) can convince Corzine and Lautenberg to listen to reason. Now, if only our progressive Senators could be convinced that the root of our problem is the high cost of government. Out of control spending that has shot New Jersey’s income and property taxes into the stratosphere, on a direct collision course with the AMT meteor.

Miracles happen, even to liberals, and the latest proof is their discovery of the horrors of the alternative minimum tax, or AMT. They've finally found a stealthy, soak-the-rich tax increase they don't like--and, better yet on this annual tax-payment day, their revelation may make tax reform possible.

Especially, er, rich, is the fact that the AMT is biting hardest in the most liberal, high-tax states. That's because the AMT doesn't allow deductions for state and local taxes the way the regular code does. So middle-class taxpayers in New York, California and other states with high income-tax rates are getting hit sooner than people in, say, Florida or Wyoming. It is the ultimate blue-state tax.

This helps to explain why people who normally thrill to higher tax rates are suddenly up in arms. Liberal newspapers are now denouncing the AMT as a "tax increase" and blaming the White House for not doing more to stop it. "The AMT needs to be fixed," moans Senator Barbara Boxer's spokesman, in what has to be a tax-reform first. "We need to address the AMT, which is trickling down to catch more and more middle-class families in New York," says Empire State Senator Chuck Schumer, another Saul on the road to Tarrytown.

We could ask why these Senators don't merely call for lower taxes in their own states. But let's be generous and congratulate the prodigal liberals for joining the broader cause of tax reform.

As for the politics, the silver lining of the AMT is that it will drive blue-state Democrats into the tax reform debate later this year. Their own constituents will be demanding some relief. So far this year, Republicans are again proposing a temporary AMT fix that would spare some taxpayers from its clutches for another year or two. But maybe they should instead let this class-war Frankenstein continue to terrorize the liberal countryside until Democrats have no choice but to support major change when the President's Tax Reform Commission reports in July.

Who knows, this entire AMT experience might even induce liberals to reconsider the wisdom of soak-the-rich tax policy. At least we can dream. Happy April 15th.