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04/14/2005: "Bush’s Blue State Tax"

In honor of Tax Day, I’m spotlighting my discovery of the one tax in the universe that Bush apparently views with fondness. Could there be such a thing? Well, consider the “coincidence” that this is a tax on income that hits only high earners, and yet in three rounds of massive cuts benefiting high earners this particular tax has been completely untouched. I’m speaking of the Alternative Minimum Tax, a tax I’ve gained some personal experience with over the last couple of years. As background, this was a tax first imposed in 1969 to pick up “millionaires” whose income was so heavily shielded by deductions that they would otherwise end up paying little or no tax. It was never indexed, so an increasing number of middle class Americans are being picked up, people who would still be paying plenty of tax even with their deductions (ironically, because of Bush’s tax cuts.) I wasn’t surprised to get hit last year, since I had a very nice earnings windfall two years ago (not internet bubble capital gains, BTW. As an aside, one of the outcomes of this windfall is my decision to invest in this very site). Imagine my surprise when doing my taxes for last year’s “normal” earnings situation (including a college professor wife on sabbatical) to find I would be paying twice the AMT amount as the previous year! This definitely caught my interest. What I found is that this is a “bubble” tax – it doesn’t have much impact on the super rich (Bush’s self-acknowledged base, as anyone who’s seen Fahrenheit 911 well knows). Its wallop is reserved for the middle class, and particularly for a certain segment of the middle class. AMT lucky winners tend to have the following characteristics relative to other Americans: high property taxes, high state taxes, high mortgage payments, and high contributions. What segment of Americans does this best describe? Working stiff Blue State Americans! So there’s our answer to the strange inconsistency behind right wing enthusiasm for some forms of tax relief over others. Bush and Rove must view putting a financial hit on the people that most consistently voted against them and also most consistently contributed to their opponents as poetic justice indeed. Two states away I can just about hear their cackling!