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TheDumbMoney (47.10)

The Buffett Rule is Alternative Minimum Tax 2.0

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April 13, 2012 – Comments (10) | RELATED TICKERS: SPY

I have been spouting this on my Twitter stream since at least yesterday, but forget "class warfare," forget "it's just political," forget the polls.  The thing nobody is saying about the Buffett Rule is that is version two of the Alternative Minimum Tax. 

When the AMT was originally passed, it was to deal with various deductions that meant certain rich people paid very little taxes. It was not inflation-indexed, so decades later, many middle-to-upper-middle class families pay it.  People have been complaining about AMT for years.  Everyone hates it. 

Fast forward a few decades.  Now we have the proposed Buffett Rule.  Guess what?  As with AMT, the Buffett Rule kick-ins are not inflation-indexed either!  As with AMT, the Buffett Rule is meant to make sure rich people who have a bunch of deductions (or lower tax rates, because their type of income is taxed at a lower rate) pay a higher rate. 

DOES THAT SOUND FAMILIAR?  It should!  Because it's the AMT all over again.  And because it's not inflation-indexed, in thirty years we all will be paying it, as strange as that might seem to you now.

I'm not anti-tax.  Personally, I'd like to see no new taxes until unemployment gets down below 7%, then I'd like to see the Bush Tax Cuts phased out over the course of a few years, the carried interest rate rule taken away, the Corporate tax reduced to world-standard levels (that should happen now), and at least one new bracket added above current brackets.

But the Buffett Rule is just stupid.  It is staggering to me that it is not inflation-indexed, and that even as AMT hatred goes on unabated, nobody, and I mean nobody, seems able to put two-and-two together to get four, or to point out that this thing is basically nothin' more than the AMT all over again.

Seriously.  Not even Fox, or the Republicans or those who have every incentive to put it together.  It is boggling my mind ova heah.

10 Comments – Post Your Own

#1) On April 13, 2012 at 5:39 PM, wolfman225 (64.44) wrote:

^Nuff said.

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#2) On April 13, 2012 at 6:26 PM, TheDumbMoney (47.10) wrote:

THanks, wolfman.

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#3) On April 13, 2012 at 7:13 PM, outoffocus (23.25) wrote:

Because republicans could care less about actually fixing the tax codes, reforming health care, or ...you know...common sense.  All they care about is being anti-obama.  Thats why if we change parties, the state of this country will stay the same.

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#4) On April 13, 2012 at 7:26 PM, wolfman225 (64.44) wrote:

Come on, 'focus. DTAF has posted a thoughtful piece without once mentioning politics of any stripe. You have to come out of the blue with the typical anti-Republican "they don't care" rant. Neither party is interested in true tax reform and simplification (although certain individuals are making efforts) because money=power and neither side will willingly surrender either one back to the people.

Don't you have anything relevant and/or constructive to add?

Again, great post DTAF. The AMT angle should be obvious, which only leads me to believe that everyone DOES see it.  They simply aren't mentioning it for their own reasons (money/power being foremost).

 

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#5) On April 13, 2012 at 8:08 PM, outoffocus (23.25) wrote:

"Not even Fox, or the Republicans or those who have every incentive to put it together.  It is boggling my mind ova heah."

 I was merely responding to that comment.  Otherwise I was fully agreeing with what he said.  Why you found that necessary to attack is beyond me. If you believe for one second that this has nothing to do with politics then you are deluding yourself.

Have a nice weekend!

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#6) On April 13, 2012 at 10:46 PM, wolfman225 (64.44) wrote:

 "Why you found that necessary to attack is beyond me."

Maybe it was the "republicans could care less about actually fixing the tax codes, reforming health care, or ...you know...common sense.  All they care about is being anti-obama." comment/attack of yours?   Wow. You really ARE "outoffocus".  Have you considered lasic?

P.S.  Of course this whole thing is all about politics. We ARE talking about politicians in an election year, after all.

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#7) On April 14, 2012 at 8:26 AM, outoffocus (23.25) wrote:

Well I'm tired of politicians more focused on attacking the other side then getting anything done.  If you want to argue over than then thats on you.  Otherwise I'm just calling it as I see it. If you dont like it then prove me wrong.  Otherwise, Great blog DTAF!

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#8) On April 14, 2012 at 11:29 AM, leohaas (32.36) wrote:

The tax policy is a political subject. Always has been, always will. So if you post an opinion about taxation, you bet you are going to get some political responses. Even on a blog that is supposed to be dedicated to investing.

FWIW: I agree with DTAF. If we are going to institute this Buffett rule, it should be indexed. But that won't happen for political reasons. Politicians love the fact that the AMT is not indexed. Every year it gives them an opportunity to show their voters that they are fighting for them. They can use it as a bargaining chip. And they do, just like they do with the debt ceiling...

For the same reason, they will learn to love the Buffett rule if it is enacted.

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#9) On April 14, 2012 at 12:09 PM, TheDumbMoney (47.10) wrote:

I would agree tax policy is inherently political.  However, I would hope my post is somewhat apolitical, since: 1) I am expressing disdain for a present Democratic initiative, while 2) expressing support for other Democratic initiative; and 3) expressing an idea that is being expressed neither by Democratic politicians or by the Republican ones that you would expect to make this criticism.  So you are all right in a way I think!  :-)  The fact is, it's an idiotic and gimmicky rule, and it is the AMT 2.0.  Rather amusingly, I don't think even Obama wants it to pass.  It's just a means for him to politically urinate on Republicans, since it puts them on record as not even wanting to raise taxes on the few thousand or so richest Americans.

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#10) On April 15, 2012 at 8:50 AM, wolfman225 (64.44) wrote:

^BINGO!

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