I’ll freely admit that before I assumed the editor’s post at Accounting Today, I didn’t know the difference between the AMT and the IRT.
But as I grew into the job, the acronym for alternative minimum tax never seemed very far away until one year, it got a little too close for comfort. I received a frantic call from my accountant warning me that there was a possibility that my wife and I could fall under the dreaded AMT umbrella.
Fortunately, that scenario never came to fruition. But the subject and subsequent calls for its repeal have appeared countless times within our pages.
As most of you know, some two weeks ago, Rep. Charles Rangel, D-N.Y., chairman of the House Ways and Means Committee, plopped down his self-labeled “Mother of all Tax Reforms” a mammoth $1 trillion proposal to, among other things, offer a repeal of the AMT.
Now, critics of Rangel’s package no doubt will leave the “mother” prefix when referring to the reform, but choose a somewhat different and, most likely, bleeped out suffix. Proponents meanwhile will point to the near-unanimous agreement of eradicating the AMT, while both alternately raising and lowering taxes in various income strata.
Now I’ll allow far brighter minds than mine to debate the merits or lack thereof of Rangel’s tax-reform gargantua, but understandably overshadowed by the Rangel hoopla, was an AMT repeal solution offered up by the New York State Society of CPAs.
The NYSSCPA’s proposal, known by the moniker of Simplified, Exact, Transparent Tax, or SET Tax (www.NYSSCPA.org) is based on the formula of: Income minus congressionally defined subtractions (deductions to those like me) times rate equals the tax.
Much like the oft-discussed flat tax, the SET Tax utilizes a single rate.
The NYSSCPA makes the cogent argument that under the SET Tax, taxpayers would be able to see what taxes they owe, and even why they owe them, something I’ve never been able to get my CPA to fully explain.
As an added incentive, the NYSSCPA believes the SET Tax would hone compliance rates (always a good thing) while being able to raise more tax revenue. It’s also billed as a revenue neutral solution.
It’s also revenue neutral, distributing the tax burden among various income groups.
I doubt anyone expects much, if any, action on tax reform for the remainder of 2007.
But with 2008 being an election year, it promises to be one filled with campaign promises and reforms. Whether that extends to the AMT or SET will be worth watching.
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