Chip Taylor

Fairness, simplification, and reform

An article in the New York Times outlines some of the factors complicating federal income tax simplification. One obstacle is the multitide of incentives for favored activities built into the existing code -- plus the ones that are being added right now. Recipients won't give them up without a fight.

Another obstacle is the preceived unfairness of making the tax code any less progressive.

This part is interesting:

For all the obstacles, supporters of tax reform have one big factor on their side: an urgent need to change the alternative minimum tax before it ignites a political firestorm. The alternative tax was created years ago in an attempt to limit the extent to which high-income people could use arcane tax deductions to shield their earnings.

But the alternative tax is not indexed for inflation, which means that it is on track to hit 30 million mostly upper-middle-class families by 2010 (the truly rich, for a variety of reasons, almost always escape the alternative tax), imposing additional taxes on them beyond the requirements of the ordinary tax code.

Of course, it was the "truly rich" who were the target of the AMT to begin with.