The AMT is DOA

By Uzo Ometu

The Alternative Minimum Tax has been sticking it to American taxpayers for years, but on December 19, 2007, Congress finally decided to do something about it.

The House of Representatives voted on a measure that would relieve 21 million tax payers of their responsibility to the Alternative Minimum Tax (AMT) for the 2007 tax year. In fact, they voted for this bill emphatically, with a 352-64 outcome.

The AMT was created in 1969 in order to prevent the “rich” Americans who were paying virtually no taxes because they were using a plethora of deductions and loopholes to get around paying income tax. The AMT is a form of back up tax enforcement that requires people of specific income brackets (those who are “rich”) to pay a minimum tax should their original tax filing result in owed-taxes that are below the AMT. Thus, if a taxpayer does his or her taxes in such a way that they end up owing no income taxes (or taxes below the AMT), then they have to pay the AMT which taxes at a rate of either 26 or 28 percent.

The AMT has been obliterating the incomes of millions of middle-Americans since 1986 when President Ronald Reagan and Congress elected to make some major changes in the tax system that would result in the average person’s deductions being effectively negated by the AMT. Also, since the AMT’s induction in 1969, there have been no changes to it that have accounted for inflation, thus creating all sorts of problems in using it in an economy that is almost 40 years removed from the one the AMT was created under. Because of those factors, Americans who aren’t rich and who fall into the middle and upper-middle class economic categories have been paying more than their fair share of taxes.

Had Congress not enacted this measure before the tax year was over, approximately 21 million Americans would have paid an average of $2,000 or more on their taxes. Some of these people make as little as $30,000 to $50,000 a year, and an additional $2,000 in owed tax money could represent as much as 6% of their income.

However, there is the question of how on Earth this $2,000 from 21 million people is going to be replaced? This is a question that the 64 people who voted in opposition of this measure were trying to raise via their votes. That’s over $42 billion in potential tax earnings that the government is essentially rejecting, and there is no provision in the measure voted on today that will replace that amount of money. As if our national deficit wasn’t big enough, now we’re instituting provisions without regard for how we are going to pay for them.

It was a good effort by Congress, and it was the right thing to do. But it would help if the nation’s most empowered politicians could demonstrate a little bit of skill and give me more than just good intentions.

Should We Reverse Urbanization?

It is official, over half of the world has been urbanized- meaning that there are more people who live in cities than in rural areas. According to United Nations Population Fund report, by next year, more than half the world’s population will live in towns and cities. That’s over 3.3 billion people. That number is expect to balloon to almost 5 billion by the year 2030.

Such an outcome can have dramatic effects on our futures. For centuries now, the move from rural areas to suburbs and inner cities has been the social movement. However, with more people officially living in cities, is it plausible to think that this whole thing could reverse itself over the next few centuries?

Some people look at the city as a negative phenomenon. Citing the city as a place filled with pollution, poverty, and lack of space. But in reality, is this really the cause of the city, or just a misunderstood correlation? Afterall, is it better for a poor person to live out in the woods and to try to start a life of agriculture and self-sustaining with little or no capital? Of course it isn’t. Besides, the GDP per capita is much greater in cities than it is in rural areas. Yes, a lot of that can be attributed upper class, but most of it is because the people in the middle class are result of the increased economic mobility that cities allow for.

Is pollution really greater in a city when you account for the pollution caused per person, and the fact that things are created in mass quantities thereby eliminating much of excess waste that can be derived from creating for one’s individual family, or even just themselves?

Moreover, as for a lack of space, that is a choice that people make, and it is a choice with way more benefits than detriments. Being confined to live in more dense communities forces people to interact more, and interaction is the root of creation, which is what has allowed developed nations to become what they are.

So you must ask yourselves, are the trivial non-issues really worth declining the sizes of cities?

Some people will argue that we will have no other choice.

There are those who see the Baby Boomer era that forced residents into cities, as something that will reverse itself, citing that it is a simple case of what goes up most go down.

As Robert Brugemann of the University of Illinois at Chicago notes, “In virtually every affluent nation on Earth, the old 19th century industrial cities have exploded outward, allowing densities [of cities] to plummet at the core as residents move further out into low-density suburbia…The city of Paris today has a third fewer residents than it did in 1907.”

Is it that simple though? What could possible cause people across the world to leave the cities to back into rural areas and spread out? Can people, especially in America, give up modern day entertainment, retail, and companionship? In the days of the Internet where people from across the world can connect, is that enough to replace the relationship that one has with their next-door neighbor, their co-workers, or even just the regulars of everyday life. Will America really revert to a society that is centered solely on the family?

I don’t think so. I think that creation, innovation, relations and forward movement relies on the fact that people live in proximity with one another. The very idea that two people who do not know each other can work together everyday in order to produce and contribute to the sustaining of the economy is vital to the way of the world. Yes, it would be nice if every family could fend for itself. But what price do we pay when we no longer rely on one another?