Its that time of the week again, the latest edition of the Carnival of Liberty, number 33 to be exact, is up at Peter Porcupine. Go check it out.
Next week’s edition of the carnival will be hosted at Committees of Correspondence, so start getting those submissions in now. And, if you’re intereted in hosting a Carnival yourself, I’ve got slots open in late April and all of May. Let me know.
Technorati Tags: Carnival of Liberty , Life Liberty Property , Carnival Hosting
As Stanley Kurtz, at NRO, points out:
So Summers behaved badly. But that just shows how serious the problem of our politically correct campuses is. Students face a daily choice between speaking their mind and harming their own career prospects by alienating the professors who control their grades and recommendations.
The Harvard faculty continues it’s tyranny of the majority. Summers was one of the folks actively working to reverse the politically correct and authoritarian culture of our university campuses. It appears, at least in the short term, that the culture tyrants have won. Intellectual honesty and open discussion of issues will not be tolerated at Harvard. The lesson will not be lost on the students.
“All, too, will bear in mind this sacred principle, that though the will of the majority is in all cases to prevail, that will to be rightful must be reasonable; that the minority possess their equal rights, which equal law must protect, and to violate would be oppression.”
— Thomas Jefferson (First Inaugural Address, 4 March 1801)
In the news recently, and in Congress, discussion has focused upon how the AMT’s net is widening, and the looming “crisis” when it spreads. There’s expected to be an enormous (4x or more) increase in the numbers of taxpayers subject to the AMT in the next year, and the ramifications of this will be brutal if nothing is done. How brutal? Instead of the current 3-4% of households subject to the AMT, we’ll be looking at about 15%:
This parallel tax system was created two generations ago to take away tax breaks from about 150 wealthy taxpayers who had piled up write-offs to erase their tax bills. Chances are, it seems irrelevant if you aren’t among the 4 million taxpayers who owe it for 2005.
But give it time – a year, to be exact. These days you don’t have to be rich for the AMT to wipe out your write-offs.
Though most of them are unaware of it, 21 million Americans are on the hook to pay the AMT next tax season barring intervention from Congress. Some experts predict lawmakers will restore an expired tax provision that had slowed the AMT’s spread through 2005. If they don’t, however, it will unleash a fivefold increase in the number of taxpayers who will owe what one prominent U.S. senator calls the “Darth Vader of the tax code.”
…
The AMT will strike 35 percent of all taxpayers with $50,000 to $100,000 of adjusted gross income in 2006 – up from 1 percent in 2005, according to the CBO. Two out of three will owe it in 2010.
The AMT will hit 81 percent of taxpayers with $100,000 to $200,000 of adjusted income in 2006, nearly five times the 17 percent share in 2005. It will net more than 95 percent in 2010.
To understand the problem, a little bit of history is in order. The AMT was started in 1969 after it was found that a few very wealthy Americans managed to completely evade paying income taxes. The idea behind the AMT is a brute-force solution to a complex tax code, telling individuals that despite the fact that lawmakers have written thousands of deductions, exemptions, and special rules into the tax code, there is a certain minimum that must be paid. Rather than fix the root problem, which is the carving out of deductions and rules to please special interests, they said that all those rules apply, but only to a certain point.
All the AMT was designed to do is to reduce the impact of all the loopholes and deductions in the tax code, and ensure that those with the means to direct their assets to reduce their taxable income still pay “their fair share”. I personally believe that if we want to look at the problems correctly, we should solve the source (special interest loopholes and deductions), but I’m also an engineer. I know as well as anyone that at times, solving the root problem is simply too difficult. I’ve worked with customers who are running into a technical problem, and it is simply more effective, less costly, and quicker to brute-force a solution than to go fix to the root cause. Given that fixing Congress is probably not going to happen any time soon, the AMT is good legislation– in theory.
In theory, Congress is trying to blunt the tax implications of a few very rich people who are able to shuffle assets and income to reduce tax liability. It is designed for those people who have much more economic freedom than the “average” taxpayer. But therein lies the problem. Congress didn’t design this legislation well, and it’s increasingly affecting the “average” taxpayer (quotes added as it is still restricted to the upper-income taxpayers, but increasingly affecting people who do not employ the sort of advanced tax strategies this legislation was targeting).
It’s somewhat likely that I will be feeling the effect of the AMT next spring, and I can tell you I’m not happy about that. I, like many other people, have to plan my finances based upon certain information. One aspect of that information is the level of mortgage interest I pay, which is deductable. Given that I’ve only owned this home for a year, I’m still at a point where the bulk of my monthly payments are interest, and thus get a fairly substantial deduction. I don’t yet have kids, so perhaps I may be spared. I know lots of young professionals with kids, though, living in places like California or the Northeast, who will run into the AMT next year because their deductions are just “too large”. Especially with the larger mortgages they carry, the interest deduction and exemptions for kids will quickly put them in the AMT’s clutches. For people like me, who base certain financial decisions on what we know of the tax code, getting snared in the AMT net could be tremendously painful.
Congress have their backs against a wall. Budget and revenue projections depend upon the income of the AMT to continue as if there is no reform. Our legislators are expecting to spend the money raised by ensnaring millions of people in this net. When the President’s tax panel gave their recommendations, the reason they had to cut so many personal deductions was to offset the cost of fixing the AMT. They know that to fix the AMT will be incredibly painful, because they either have to reduce their spending plans (not likely!) or find revenue elsewhere– raising other taxes or eliminating deductions.
Congress does not want to fix the AMT. In fact, given that Congress really doesn’t care very much about the “average” taxpayer– as evidenced by their spending habits rewarding people who contribute to campaigns and screwing the rest of us– I don’t think they even care about the financial implications of the AMT upon us. After all, what we earn is legitimately the government’s money, and we should all be grateful they let us keep so much of it. They do care, however, about the political implications. If the AMT ensnares 21 million people this year, the backlash will be enormous. While Congresspeople don’t regularly pay attention to the worries and concerns of us plebes, they saw after Kelo that we can be a sleeping giant. They know that 21 million people feeling the pinch of the AMT may result in them losing their seat of power, which is their greatest and only fear.
Congress is starting to realize that they must reform the AMT or they’ll be in serious political jeopardy. For those of us who pay taxes, however, we know they’re not going to cut spending, so they’ll find another place to squeeze money from us. They’ll distribute the pain the AMT would have caused, in small changes to deductions and exemptions that cause just as much pain for taxpayers, but are harder to spot. We’ll still be screwed, but they’ll be safe. And then they’ll trumpet how wonderful they are for saving 21 million Americans from the AMT, when all they’ve done is to hide that taxation elsewhere.
So who benefits the most from reforming the AMT? Congress. Not that anyone should be surprised by this, of course. The only reason Congress does most things is to increase their own power, and shore up their own safety in office, as we saw from the Bipartisan Incumbent Protection Act of 2002. Remember who’s running this shell game, and you’ll realize that despite how close you’re watching, the shell you pick will be empty.
As America celebrates President’s Day by taking the day off, Lee Harris has penned this piece at TCS Daily paying homage to our nation’s first, and arguably greatest, President.
As Harris points out, the office of the Presidency as it was set forth in the Constitution was specifically designed with George Washington in mind. In fact, if it hadn’t been for Washington, one doubts that the Presidency could have been given the powers that it has by virtue of Article II of the Constitution:
When Thomas Jefferson first read a copy of the United States Constitution, he was appalled. He was particularly scandalized by the office known as the Presidency, comparing it to the elective king of Poland. By using the dreaded and hated word “king,” Jefferson became among the first to denounce the Presidency as a step backwards into monarchy—the very kind of government that the Americans had rebelled against in their revolution.
In creating the Presidency, the Founders were quite obviously trying to create a balance between the tyranny created by the supreme executive personified by King George III and the chaos created by the legislative supremacy of the French Revolution. Nobody wanted a King, but, at the same time, everyone had seen what happened when power was put in the hands of the collective body rather than an individual who could speak for the nation as a whole:
The framers of the U.S. Constitution, on the other hand, rejected the idea that a legislative body could govern their nation by itself. Americans had tried out this approach during the dismal days of the ill-fated Continental Congress, and they had recognized the perils of trying to operate a government in which there was virtually no one in charge. That is why they turned to George Washington—he had proven his ability to take command and to act decisively. Furthermore, he was a national hero, with wide support among the people and in every region. It was also known that Washington had flatly refused to entertain the idea of setting himself up as a military dictator when this proposal had been aired as the only remedy against the anarchy and disorder bred by the failure of the Continental Congress.
And Washington recognized the dangers of the Presidency becoming more than what it was intended to be:
By a stroke of extraordinary good fortune, the man for whom this office was designed was also a man who was profoundly aware of the potential dangers inherent in the office that had been specially designed for him. Washington was keenly aware just how easily the Presidency could degenerate back to a monarchy, or worse; and, shrewd man that he was, he clearly saw that there was nothing in the written Constitution that could prevent such a process from occurring.
For example, there is a remarkable letter that Washington wrote, before assuming the Presidency, in which he argues that he is peculiarly qualified to be President because he has no son. Now imagine a candidate for the Presidency today making such a claim: Vote for me, because I have no son. How strange it would sound to our ears. Yet Washington regarded this as virtually an indispensable desideratum in a President—or, at least, in the first President. Nor is it difficult to see why this mattered to him so much. He did not want the office of the Presidency to become the possession of a dynasty.
In this and many other ways, Washington established precedents that created limits on the powers of the Presidency beyond those set forth in the Constitution. Sadly, as the national security and welfare states have grown, the influence of Washington’s example has faded, as has the true meaning of his legacy.
blockquote>Today we now call it President’s Day, and no longer celebrate Washington’s Birthday. This is a pity. For without the greatness, wisdom, and humanity of our first President, the office of the Presidency would almost certainly have become something radically different from what any of us are familiar with—indeed, it might well have become something that none of us would feel much like celebrating. It was not the written document called the Constitution that protected us from tyranny; it was the shining example of a single man.
Well said.
