A Stitch in Haste

Just a reminder that the annual Report of the Social Security Trustees (or, as I call it, “The Doomsday Report”) is expected to be released today, although it was delayed for questionable (i.e., political) reasons last year. The consensus is that the projected date for Social Security to go into deficit (at which point the Social Security “Trust Fund” will be finally exposed as an accounting fraud) will be essentially unchanged — sometime in 2017. The less relevant date of accounting insolvency was 2040 as of last year’s Trustee’s Report.

Meanwhile, the Democrats are making noise about AMT reform. Too bad it’s the wrong kind of noise:

Under a proposal presented last week to Democrats on the tax-writing Ways and Means Committee, families making less than $250,000 a year — about 98 percent of taxpayers — would be exempt from the tax. Those earning between $250,000 and about $500,000 would see lower AMT bills, according to Democratic sources who spoke on condition of anonymity because the plan is not final.

To make up the lost revenue, families earning more than $500,000 a year would take a much harder hit from the AMT, as well as other adjustments to the tax code, the sources said.

Of course, the AMT was never designed to ensure that “the rich” paid “more” tax. The AMT was designed to ensure that 155 ultra-rich families paid at least “some” tax. Half a million in income, while nice, hardly constitutes “ultra-rich.” And paying “lots” of federal income tax is not the same as paying “no” income tax (as was the case with the original 155 families). The AMT was meant to bring those not paying any tax into the system, not as a “happy lever” that Democrats could pull and push at their whim depending on how generous they feel toward those who are already shouldering the overwhelming bulk of the federal income tax burden anyway.

Bottom line: Expect little if anything, and certainly nothing truly constructive, to be done about either the Social Security crisis or the AMT. The politics of the issues have already metastasized too malignantly to allow real reform.

Similar Posts:

• Tax Progressivity Update
• CSM: Use Social Security to Increase Tax Progressivity
• Happy Tax Day — Part Three
• Two Campaigns’ Worth of “Two Americas”
• The Democrats’ Income Tax Schizophrenia

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