Friday, September 21, 2007

The cure for the AMT: The Carbon Tax

A few weeks ago, in the context of my carbon tax thread, I noted the synergy between our trillion dollar infrastructure bill and a carbon tax. That's a spend-side synergy though, so in the interest of encouraging my one GOP reader I'll mention there's also a tax-side synergy.

America is hooked on the AMT (Alternative Minimum Tax). You can disregard all the Bush blather about cutting taxes, because he hasn't cut my taxes at all -- he's basically only cut the estate tax that affects very wealthy people. That's because I pay the AMT.

Inflation and economic growth will drive more and more Americans to pay the AMT. This is good in a way, because it's a built-in tax engine, though I think this has already been incorporated into social security and medicare projections. (Meaning if we actually did anything about the creeping tax aspect of the AMT our current huge deficits would see modest.) On the other hand, Republicans are allegedly supposed to hate taxes (true, that's not the way the Bush administration behaves, but it's the theory).

So here's the deal. Make the Carbon Tax "tax neutral". Use it to replace the AMT.

The roads will still need rebuilding, and medicare and social security will still be underfunded, but that's a political discussion. Providing a planet for our children is more important than getting our nation's finances in order.

So there you go Republicans -- embrace the Carbon Tax and axe the AMT. Let's see a candidate come out and say that ...

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