UPDATE: Bizarro Robin Hood: Take From The Middle, Give To The Upper

Houston, do we have a problem? Boston Globe (12.18.04):

"Nearly 27 million more Americans are slated to pay higher federal income taxes over the next six years as they become subject to a tax provision usually aimed only at the wealthiest Americans, with Massachusetts residents paying at a greater rate than all but four other states, Treasury officials and economists said yesterday. The provision, called the Alternative Minimum Tax, currently applies to 3 million Americans — most of them earning more than $200,000. But without substantial changes to the formula that determines who is required to pay higher taxes, it will strike 30 million taxpayers by 2010, including many earning less than $100,000, according to calculations by the Treasury Department." Emphasis supplied. 27 million in US to see tax bill rise

The problem is that the AMT isn't indexed to inflation, so over time the threshold doesn't rise to keep pace with income. I dunno about you, but to me, one obvious solution would be to just index the damned thing to inflation and be done with it. Grover Norquist, the spooky guy who heads Americans for Tax Reform, thinks that because the AMT was originally a ploy by Democrats to impose higher income taxes on wealthy Republicans, it's coming back to bite them in the ass. He thinks it should be repealed "only when Democrats 'say they are sorry and offer to give us something in return'". I told him I was sorry for picking on all those rich guys way back then, and offered to send him my old Ramones' CDs (I got 'em all on the iPod anyway, ha ha). He hasn't gotten back to me -- yet. I think he wants more. As far as that goes, there is speculation that Mr. Bush would like to get rid of the AMT altogether, but doing that would mean about $1 trillion in lost revenue. To make it up, the boys came up with an idea to eliminate deductions for state and local taxes. They figure this would raise $900 billion. Pretty much a wash, eh? OK then. We dump the AMT. Then we pay for it by eliminating deductions for state income and local property taxes. Yippee and yay!! But wait. Wouldn't eliminating those deductions cause some people's taxable income to increase? Ummmm, well yeah. Wouldn't that then mean those folks would end up paying more tax? Ummmm, well yeah again. So who gets nailed? NY Times (12.27.04):

"As the Bush administration looks to revamp the tax code, New York officials say they are particularly worried about one idea being considered: eliminating the federal deduction for state and local taxes. If the president pursues this plan, New York State would lose about $37 billion per year in federal tax deductions, more than almost any other state, according to Internal Revenue Service data. The change would affect about 3.2 million households in New York, three-quarters of which are middle- and low-income, tax records indicate." Emphasis supplied. Bush Plan Could Imperil Tax Write-Off for New York

By golly, thar she blows!! I think I get it now - folks in middle class lose the deductions and end up paying more, so folks earning over $200,000 a year can pay less by not getting stuck with the AMT!! Beauty, eh?