Democrats Tilt Stimulus Toward the Affluent With AMT Fix

By Michael Barone, Thomas Jefferson Street blog

Tom Edsall, longtime Washington Post political reporter now at the Huffington Post, has a splendid post on the stimulus package, pointing to an issue I've mentioned frequently over the years: the Alternative Minimum Tax. This tax, originally intended to prevent millionaires from completing avoiding income tax, is not indexed and threatens every year to apply to millions of affluent folks in high-tax states—Massachusetts, Connecticut, New York, New Jersey, Maryland, California—who also tend to be Democratic voters. These states have 12 Democratic senators and 88 Democratic congressmen. An annual AMT patch is a political must for Democrats, both to propitiate these affluent voters and to reward public-sector unions, which might face downward pressure on spending and taxes if many voters could no longer deduct state and local taxes on their federal income taxes (as is the case for those hit by the AMT). By putting the AMT patch into the stimulus package, Democrats have avoided having to pay for it under the "paygo" rules, which has been a big problem for them every year.

As Edsall points out, this means that the Democrats have tilted the stimulus package toward aiding the affluent rather than those at the lower end of the income spectrum.

On Facebook? You can keep up with Thomas Jefferson Street blog postings through Facebook's Networked Blogs.

• Read more by Michael Barone.
• Read more from the Thomas Jefferson Street blog.
• Read more on the alternative minimum tax.