Why all the goofy eligibility rules? Just get rid of the rule where exercising stock options counts as income under the AMT(1). It's line 14 in Part 1 of Form 6251. Just get rid of it!
When people talk about our tax system being too complicated bills like this are why.
1. For that matter we should get rid of the AMT entirely. The fact that we have 2 separate tax systems for individuals is insane. That's a bigger story though.
> For that matter we should get rid of the AMT entirely. The fact that we have 2 separate tax systems for individuals is insane.
It really is. The AMT is the perfect example of when you give someone an inch they take a mile, which is why some people fight so hard against the enactment of new taxes.
The AMT was originally enacted to catch a handful (less than 200 I believe) people who were at the time of enactment (1969) very rich and who were paying no taxes. These people had an AGI of over $200,000. That's $1.2 million in today's dollars. The AMT now affects over three million tax payers, mostly because for many years, the exemption was not properly indexed to inflation.
> The AMT is the perfect example of when you give someone an inch they take a mile, which is why some people fight so hard against the enactment of new taxes.
When the politicians were first proposing the constitutional amendment that allowed income taxes, they were throwing numbers like 1% or 2% around. It took only 4 years from the ratification of the 16th amendment for the maximum tax rate to shoot up from 7% to 67%. Now you get an effective 50% tax rate in some states. No wonder office workers spend so much time unproductively checking email and Facebook - that's the half of their time they're giving to the government.
Here's a history of the federal tax rate. Notice how it shoots up around World War 2, and takes a very long time to change even after the war ends. So it can't be that the taxes are high simply to fund government services that naturally arose:
My understanding is that the federal government cannot impose a property tax, without just distributing it to the states by population. My reading of the commerce clause is that they couldn't impose a sales tax on in-state commerce. So it's not like these went away after they gained the power to assess an income tax: they were never an option.
As a general rule, you could remove any government agency created with the increase in wartime tax revenue after the war is over. That should get you back to the pre-war tax rate.
I don't want to go down the entire list[1] of agencies, since it would take the thread too far off-topic(even this response is borderline). I should shift more work to the individual states. Also cut the military: They are so disorganized they're the only government branch that can't be audited[2].
> My reading of the commerce clause is that they couldn't impose a sales tax on in-state commerce.
(1) The commerce clause is a grant of power, not a limit. It's indisputable that the commerce clause does not authorize a tax on in-state commerce, but it doesn't prohibit one, either. So we need to look beyond the commerce clause and ask if a federal sales tax is authorized anywhere else.
(2) The dollar value of sales is income, derived from sales. The 16th Amendment gives Congress the authority to "lay and collect taxes on income, from whatever source derived, without apportionment among the several states". Therefore, a federal tax on the gross income from sales is authorized by the 16th Amendment.
(3) But, wait, we don't even need the 16th Amendment. There's a special word for a tax on sales of goods -- its called an "excise". And its an express Constitutional power of Congress even before any amendments, in the Tax and Spending Clause, with the restriction that they must be uniform throughout the United States.
As a general rule, you could remove any government agency created with the increase in wartime tax revenue after the war is over. That should get you back to the pre-war tax rate.
Pre war federal spending was ~10% of GDP. Currently we're at about 25%. So you want to cut federal spending by about 60%.
Medicare is about 15% of the fed budget. Social Security is about 25%. That's the 40% you get to keep right there. You think we should cut literally everything else?
Your assessment about what it would take to achieve the cuts you propose is not based in reality.
It may help to think of the suggestion as more a "We never should've passed it in the first place" rather than a suggestion to immediately propose a bill of repeal.
I have some thoughts on how to conduct an orderly shutdown of the programs over, say, 30 years, but they would take the thread too far away from the subject of stock options.
It would be better if the income tax was zero and we had a higher tax on consumption (allow a base deduction for poor people if you want) since what you tax you get less of, and we don't want less investment in human capital or physical capital, but less consumption is okay (though obviously still undesirable).
As for the rest, just cut all subsidies to companies and farms, as a start. Then cut the military down to what is needed to defend the US, not to waste money running an empire.
Our food import rate would climb due to the strength of the dollar. Which is fine for the short term. If bad things happen in 20 years and we can't even grow enough good to feed the country? That seems pretty bad.
We have 52 different tax systems for individuals by my count. All the states have have different rules too. Last several years, my wife and I have had to figure out our taxes five different ways on the same income.
