I am writing this post before I know if I will be one of the millions of Americans who will be snared in the Alternative Minimum Tax (AMT) trap this year. I need to make that clear before I say this. I believe that the only scenario that might create the possibility for true tax reform is if the current system suddenly creates significant pain for a large number of citizens. Such wide spread pain might create the scenario where we see millions of Americans spontaneously rise up and say "enough is enough." The AMT crisis that is looming on the horizon, in which millions of Americans will be hit with a huge unexpected tax bill, may be the event that takes America to the tipping point on tax reform.
We are not going to win the hearts and the minds of the average American with our economic and philosophical arguments on the virtue of creating a new tax system. Such fundamental change almost always has a strong emotional trigger. The system we have now has been able to win over the vast majority of people by offering each their own little perceived tax break. Home owners get their mortgage interest deduction. Good citizens get their charitable giving deductions. But, what if instantly these "personal" breaks disappear? That is what the AMT is just now beginning to trigger for millions of average tax payers. Instantly their little special interest breaks vanish and they experience the true nature of the system as it now exists.
So, even though I may well be one of the victims of the AMT this year or sometime in the near future, I believe that those members of Congress who want true tax reform should resist the temptation to go along with the current proposals to repeal the AMT. Let the AMT stay in place. Let it snare millions of Americans. And only then might we have their hearts and minds and be able to move toward a new and fairer system, which our entrepreneurial economy desperately needs if we want long term economic prosperity.
