The Wall Street Journal's fuzzy math on AMT

Today, the Wall Street Journal editorial page blames Democrats for problems with the Alternative Minimum Tax, which is going to hit millions of taxpayers in coming years if it is not reformed. Apparently, however, the WSJ has no use for budget rules -- check out this creative use of scare quotes:

The estimated "cost" of this fix to the Treasury over 10 years would be some $632 billion, which is money Democrats in Congress would prefer to spend. But as Senator Grassley notes: "This tax was never meant to tax the middle class, so why should we count it as a revenue loss when we make sure they don't have to pay it?"

That "cost" is, of course, real in the context of Congressional budgeting. President Bush has repeatedly used the revenue that would be generated by the AMT explosion to reduce the apparent cost of his tax cuts and to obscure the actual state of the federal budget.

The WSJ goes on to claim that liberal politicians' "tax schemes" will eventually "soak the middle class because that's where the real money is":

There's a larger policy lesson to keep in mind as the debate unfolds over both the AMT and the looming expiration of the Bush tax cuts in 2010: Beware politicians who say they only want to tax the rich. Sooner or later their tax schemes will soak the middle class because that's where the real money is. Regarding the AMT, Democrats are now saying they'll be glad to provide AMT relief for the middle class but they'll have to raise taxes on CEOs and other high-income Americans to do it. Where have we heard that one before?

But income is, in fact, actually heavily concentrated among top income earners. The top 5 percent now receive approximately 30 percent of national income and the top 10 percent now receive approximately 43 percent. That's, uh, real money. (And it's the reason that the majority of AMT revenue would still come from households making over $200,000 in 2010 under current law.)

Comments

[Rob]

It's perhaps worth adding that the top 5 percent of income earners, who you note receive approximately 30 percent of national income, pay 57 percent of federal income taxes. To quote you, that's, uh, real money. And very real progressivity. In fact, the top 1 percent of income earners pay 37 percent of federal income taxes.

The bottom 50 percent of income earners pay 3 percent of federal income taxes.

So yes, income is heavily concentrated among top income earners, but let's not leave the Clintonian implication (circa 1992) that "they're not paying their fair share."

[Nick]

I didn't find the WSJ's use of scare quotes at all "creative." It doesn't "cost" the government a penny when it doesn't force people to hand over the fruits of their labor.