With tax filing deadlines just around the corner, “American Morning” focused on the alternative minimum tax, a parallel tax structure that struck about 3.5 million taxpayers last year.
Business reporter Ali Velshi explained on the April 13 broadcast that the tax was invented in 1969 to prevent the highest income earners from “tak[ing] advantage of too many loopholes.” But now the AMT is threatening income earners as low as $42,500.
“What’s gonna be done about it?” asked Velshi. “House Democratic leaders say they’ll draft a bill next month that excludes anyone who earns less than $200,000 a year, which would be 97 percent of all taxpayers.”
Velshi gave sole credit to House Democrats for wanting to fix the AMT, despite Republican attempts to fix the AMT in the past – including full repeal in 1999. The CNN reporter, like many other journalists, said nothing about the very same Democrats’ voting for AMT rate increases (and failing to index to inflation) in 1993 and against its full repeal in 1999.
Instead, Velshi warned the audience not to expect full AMT repeal and then got his numbers wrong.
“Why? Because repealing the AMT would cost the government $50 billion a year. And no matter who you are – if you were the government – you probably wouldn’t give up the $50 million a year,” said Velshi.
So which is it: $50 billion or $50 million? Americans for Tax Reform’s (ATR) chief economist, Daniel Clifton, has put the estimate at $872 billion over the next 10 years – which averages out to $87.2 billion per year.
Neither Velshi nor the Anchors O’Brien (Miles and Soledad) made the point that the money doesn’t belong to the government, but to individuals. Journalists frequently bemoan the “cost” of tax reductions to the government, even though the government has enjoyed high revenue since the tax cuts of 2003.
The “American Morning” team also didn’t explain that under “pay as you go” rules, the Democrats will likely try to raise taxes to “pay” for AMT reform.
“It is unconscionable that members of Congress who created this problem by raising tax rates and failing to index for inflation and then subsequently voting against repealing this tax six years later are now seeking to rearrange the chairs on the Titanic by forcing nearly $1 trillion of tax increases to ‘pay’ for AMT repeal/reform,” ATR president Grover Norquist told the House Ways and Means committee on March 7.
