D.C. Finalizing Plan for Assault on Metro NYC

Bruce Krasting's picture


Bloomberg has a story today that has special meaning for me (Link):





- The USA has a tax that very few pay. It is called the AMT (Alternative Minimum Tax).


- AMT became law in 1969 when it was (shockingly) revealed that (get this):


155 people earned more than $200,000 and legally didn’t pay any taxes.

What is it today? 15Mn?


- AMT (functionally) eliminates most tax deductions (the mortgage deduction is excluded).


- AMT is not linked to inflation. As a result, the threshold for being subject to this tax has fallen every year.


- If applied to all taxpayer today, the AMT would clobber the middle class. It would change the way charities and churches are funded. It would discourage people from having children. It would discourage home ownership. It would crush people who live in states where there is an income tax.


-Congress is well aware of the problems with AMT. Every year for the last ten they have rolled over a "patch". The yearly exemption reads (sort of):


If you didn’t pay AMT last year, you don’t have to pay this year either! Vote for us early and often!


The language from Congress could also be read:


If you were unlucky enough to have been socked with AMT last year, we’re going to stick it to you again. Sucker!


Note: I’m one of the suckers. I’ve been paying this for the last 15 years. It has added up to big bucks.


Consider the Fiscal Cliff as a Wordle:



AMT sticks out. It is the basis upon which some compromise could be reached to avoid the most significant consequences of falling off of that cliff. A few examples of why AMT could become negotiating bait.


-If applied as the law is now written, AMT would raise a ton of revenue ($1Trillion++ over ten years). But politicians could say that “they” did not “raise” taxes, or create “new” taxes.


-The cost of AMT rises with income. It is a “progressive” tax. Democrats like that.


-Republicans want to broaden the base. AMT accomplishes that as well.


-Everyone wants to eliminate deductions (a stealth tax increase). AMT most certainly accomplishes that.


-AMT minimizes petty fraud of the IRS.


Note: How many people create an extra thousand or two of deductions out of thin air every year? Answer: Many. The IRS has no resources to find out. But with AMT, there are no deductions at all. Problem solved.


So who is going to get hit with AMT? A lot of folks is the answer. In 2010 only 4.4 Mn souls got hit with AMT. If Congress does not vote on another patch, that number will jump to 33Mn in 2013 (750% increase!).


Bye bye child deduction. You can’t deduct those charitable contribution you make. But by far the worst hit comes from the loss of deductions for local property taxes and income taxes paid to the state. The question of who will get hit the worst narrows down to the states that have high income taxes and also ridiculously high property taxes. Numbers 1, 2 and 3 on D.C.'s target list:


New York


New Jersey


The Big Apple is in the middle, and will suffer the most. Not only do NYers pay their state 8%, but they have to kick in another 2% for the privilege of living in town. Very big money is involved. All of these deductions could be lost on New Year’s Eve. Ten million people in Metro NY could get hit. It would be like Congress dropping stink bombs on Times Square.

Note. I absolutely promise that you come to hate the AMT. It will cost you, but worse, it will influence your decisions as to where you live, how much you give, how you invest, whether you should have a child and a whole bunch of other things. Oh, and you can forget about inventing those charitable expenses every year (and sweating an audit).


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malek's picture

What a propaganda piece, Bruce. Remember to repost it again every year, when it comes to the time CONgress has to put into law an adjustment "patch" to the AMT (as it's not automatically linked to inflation), as they did every year after more or less show, for a long way back.

It would discourage home ownership.

And you parrot the euphemism that the mortgage deduction is to help individuals, not banks? Shame on you.

notadouche's picture

I hope what I'm about to write doesn't invoke black helecopters but just imagine, in the vein of John Lennon's IMAGINE, if instead of using twitter to do those flash mob dancing bits that it were used to convince every single american to not file a tax return?  Of course that would be impossible but what would be the ramificiations of such an act of defiance by the entire population not filing?  It's a thought, hopefully not so dangerous that I get a knock on the door.  Would that force a change in a better, less complicated tax code or would the government actually take possession of the all the properties in the land and jail the entire population?  

Stuck on Zero's picture

If this AMT thing goes through and high-tax states lose property tax & state tax deductions then people will move out and property values will collapse.  Millions of mortgage payers will walk away from their properties and the Federal Government will be on the hook for $5 trillion in defaults.  That would be really stupid on the part of the government.  They'll probably do it.


Hannibal's picture

One always has a choice: refuse to pay or rollover and pay. Love or leave it,...eh!

notadouche's picture

Yeah let's get those damned corporations and let's even make it illegal to make a profit because those hundreds of millions of jobs created by these bastard corporations are fucking useless to this country.  While we are at it let's kill the golden goose too.  I don't want corporations to be able to act as an invidiual politically but too many folks here sound like they want to cut their noses off to spiite their face.  Seems to me it's a lot like rioting and looting your own damned neighborhood.  Funny how the politicians rail about the evil corporations but gladly open their pockets and let them stuff their coffers full to the tilt.  Let Maxine Waters have her way and see what happens.  If you don't like a corporation, don't buy their shit, don't work there.  It's kind of like if you don't like what's on the radio or TV change the damned channel.  But somehow too many folks in this country can't seem to grasp the simplest of concepts.  If you don't like what you see in the world, most the time it's more of a problem that you don't like what you see in the mirror but it's so much easier to blame everyone else.  Then again sometimes bad shit just happens to good people and that can never be legislated.  

Take responsiblity for your own actions.  If we all had that mindset I believe we would have a much different and better government and country.  Ex.  Chicago teachers on strike mainly because they don't lke the idea of being evaluated and want job security no matter what.   Much like the post office or any other govt job.   If you don't like your job or your life there is this great thing called free will.  Instead of complaining about everyone else, use the free will, or what's left of it and do something about it.  Don't wait though as it appears our govt is bound an determined to take that away as well.  

In my humble opinon we need to be far more worried about the state of govt than the state of corporate America. Just this morning on the news I just saw that checking for Ovarian Cancer is a waste, just like mammograms and prostate exams.  Funny how important they were the last few decades but now, magically with Obamacare these test are not only unneccessary but the cause of false postives and needless surgeries.   Speaking of needless surgeries, who has had more on the public dime than Nancy Pelosi?

Burticus's picture

As a CPA (not a tax preparer), I don't even remember AMT until 1986, when it was greatly expanded.

In 1986, the feds also forced all pass-through entities to change to a calendar year.  This allowed the feds to collect a one-time spit-in-the-bucket amount of catch-up tax, helping Reagan keep the increase in the federal debt to "only" 1.6 trillion FeRNs over his 8 years in office (more debt than had been incurred since 1787).  However, it also created a huge "workload compression" problem of tax returns due March 15 & April 15, screwing the CPA profession every year thereafter.

The only way to save this republic is to repeal the 16th & 17th amendments and the (not really) Federal (with no) Reserve Act.  It is no coincidence that all three were imposed back-to-back in the coup of 1913, a trident into the heart of the republic.

You cannot have a direct unapportioned tax, since it allows the feds to rob the citizens of the states, then use this new "federal money" to puppeteer the state legislatures, thus destroying our framers' vision of "federalism," the balance of power between the federal and state gubmints.

Federal taxes are supposed to be apportioned to the states on a capitated basis.  State legislatures are then faced with the unpleasant task of collecting from their citizens and handing the FeRNs to the feds.  This reality would cause state legislators to clamor for limited federal gubmint, rather than groveling for "federal money."

acrabbe's picture

the 16th amendment wa never really ratified... just another factor to consider in this great mindfuck

Winston Churchill's picture

True,and even if it had it give the Feds no power to impose an income tax.

So ruled and held by Scotus no less than four times post 1913.

GoodMorningMr.VanRumpoy...'s picture

Voted up! Anymore very few people understand the concept of Federalism and what the 16th and 17th amendments did to destroy this important check on power.

Urban Redneck's picture

True, but that is also the problem that renders that course of action implausible.  The sales job is impossible in a "democracy" where the majority are uneducated swine sucking the government, and wealth is concentrated amongst an oligarchy with monopolistic regulation which creates barriers to entry and competition, while protecting the concentrated wealth from its "civic duty".  A solution is needed which can be sold to all sides, to overcome the gridlock favored by the oligarchy.

Libertarianism is good, but winning is better.

Urban Redneck's picture

Bruce, some food for thought, since you understand the tax code, regulatory burden, and the money system, and I like recycling-

Every time the class warfare card gets played around here that scene from Blazing Saddles plays in my mind. The other side is less disingenuous (or at least better comprehends finance) but they continually fail to offer a viable solution. Instead writing a dissertation length refutation of both sides (and compromise my ever-present option to pick up a no-show seven-figure job at any of the big banks here in Zürich) I’ll simply provide the three simple steps which will accomplish the following and provide the Fed’s own hard numbers to back it up:


Balance the budget (without the even cutting the current monstrosity)

Pay off the national debt within 3 years

Attract significant new and repatriated Capital, Savings and Investment

Not create significant inflation


The 1% and 10% Plan


Step 1- Pass a simple law to expire the U.S.C. and C.F.R. in 24 months. Congress and the Executive will have 12 months to redraft them at no more than 10% of their current word length, and the new laws and regulations will take effect 12 months later.


Step 2- Abolish ALL existing federal taxes: the Income Tax, the Capital Gains Tax, the Tax on Dividends and Interest, the Corporate Income Tax, the Death Tax, the Gasoline Tax, all the pending Obamacare taxes, and any other Federal taxes buried in the USC.


Step 3- Impose a 1% Federal tax on the MOVEMENT of money.




Without even worrying about anything as insignificant as the US cash economy and the movements of the USD 1T cotton-linen money supply, a 1% tax just on Fed cleared transactions (Fedwire, CHIPS, ACH, Checks, EBT, POS, and Credit Card) would have yielded SEVEN TRILLION DOLLARS in revenue in 2009 the last year for which data is available (and wouldn’t require the IRS for enforcement). Data from the Federal Reserve studies is available at:




And for an added kicker the HFT bots which cannot clear a 2% breakeven on a round trip will put their owners out of business and might restore at least a little integrity to the equity markets.


Let’s see the job creation Wizard-from-Bain and his policy wonk Boy Wonder beat that one.


If you can’t audit the Fed you might as well tax it, and make everyone a 1%er in the process...


Watauga's picture

The proposed 1% tax on what you call "the movement of money" is pure insanity for the taxpayer.  It would result in a 1% tax on everything we do financially.  Write a check, 1%.  Automatic deposit of pay, 1%.  Pay a bill, 1%.  Buy a house, many 1%s (hundreds, possibly).  It is a low rate VAT 1000 times over.  It would kill the individual and make everything much, much more expensive.  Do you have any idea how many 1%s go into, say, buying a car?  Thousands--THOUSANDS.

nofluer's picture

Wouldn't hurt the little guy at all. The little guy gets paid and the employer pays the 1% movement tax when he pays the employee..

The employee takes his pay out of the bank in cash, pays the 1%, and spends the money - in cash.

The vendor/store takes the cash and sticks it in a box under the counter. (a smart store owner would only sequester a portion of the cash so that he could attribute the "lost" money as "inventory shrinkage.")

The vendor keeps cash separate from electronic transfers and checks.

The owner of the store takes the money home, then transfers it to the tin can buried in his backyard after giving his kids their allowances, or their cut of the family's wealth.

The government keeps collecting transfer tax on the e-transfers - gets nothing on the cash transfers. (It could be argued that cash isn't a transfer of money, but of debt... thus not subject to a money transfer tax.)

OR the employee buys gold or silve with his money and trades with that instead of "money".... no tax on non-monetary asset transfers...

GREAT system!!!


Urban Redneck's picture

It would neither kill the individual, nor make everything much more expensive, in fact, quite the opposite.  It does take taxation into the HFT era, but society has been acclimated to "fees", especially for financial transactions.  Everytime someone uses a credit/debit card, or even cash, the price of the good already reflects several such fees.  The benefit is the 0% tax rate attracts and retains capital, and the 1% is effectively innescapable for participants in non black/gray markets, especially the rich and the banks.   

The existing tax framework was developed before globalization and electronic finance, it is a dinosaur, and needs to extincted, and be replaced by a structure developed for the current state of economic evolution.

The US is unique in terms of land, natural and energy resources, transportation infrastructure, manufacturing capacity, financial markets, and relative scale.  Losing the Globalization game is a testament to both the lack of leadership and dishonest nature of the Globalization sales job.  Winning the globalization game is a just and noble "fuck you" to the architects of decline and failure.


Watauga's picture

By the way, UR, are you conceding that globalization is the only future and that if the U.S. does not lead the way and shape it as it chooses, it will end up playing by the rules imposed by, say, a China-led globalized world? 

I reject completely the "globalization is the only future" assumption.  I reject that globalization is in any way good for the vast majority of individual human beings.  I reject the notion that there is a globalization game to be won by anyone.

The only viable future is to get more local, not more global.

Urban Redneck's picture

I wouldn`t say it is the only future, but rather it is the current reality.  I don`t think the US has the stomach to handle full-blown Isolationism (perhaps the stupidity to wind up there by accident though).  I favor localization, but not at the cost of reducing the economy to one of subsistence agriculture.  Properly localizing a complex economy would be incredibly time consuming given the number and length of investment cycles, and I don´t think the status quo can be maintained that long. 

Watauga's picture

Absolutely incorrect.

Purchase Car A.  All "money movements" (MM) related to that car are taxed at 1% many times.  Manufacturer X has to buy material, pay employees, rent, phones, etc., so parts 1-500 are taxed at 1% each.  Manufacturer Y has to buy material, pay employees, etc, so parts 501-999 are taxed at 1% each.  Suppliers A-P are each taxed for the MMs used to buy 999 parts for distribution.  Plus they pay their employees, rent, phones, etc., which are all taxed at 1% each.  They sell the parts to automakers, repair shops, retailer suppliers, etc, and each MM is taxed at 1%, and each of those businesses is taxed on each MM. . .  Every part, then, costs hundreds of times more than it should because of the 1% tax imposed thousands of times.

The 1% tax sounds like nothing.  In fact, it is an INFINITE 1% tax.  Everything we do in this world is a financial movement, or money movement, or MM. . .  Everything.  Every part for every product is taxed at least hunderds of times, one way or another. 

Anyone advocating that we go down this path is insane.  There is no greater recipe for Big Govt than this sort of tax.  Can you imagine the IRS hit squads invading businesses to ensure there is no skimming and scamming?  Can you imagine the electronic surveillance the govt would impose to enforce this tax?  There would be no such thing as liberty or private property in such a world.


Urban Redneck's picture

You`re creating false infinitetly long supply chains and a manufacturing centered economy to support your argument.  Not even the Space Shuttle was mechanically that complex (Supply Chain Management).  Besides if your argument held water, the, the FED would already be infinitely wealthy and able to monetiye the US debt without expanding its balance sheet since it already charges (and profits) for each transaction it clears. 

And for each step in the manufacturing process that does actually currently exist, the is a supplier paying corporate income taxes, payroll taxes, dividend taxes, and employees paying income and payroll taxes, all greater than 1% to government beast already.

JOHNICON's picture

Exactly right.  hat one percent idea is not actually a tax on the quantity of money in the system.  It's a tax on the velocity of money.

The Navigator's picture

Most people make payments on their cars and homes, thus not the big hit. If you pay cash for a home or car, 1% really isn't that bad either - remember, this is in replacement of the IRS income tax, not in addition to it.

The whole thing is explained at http://www.apttax.com/ using a .03% tax instead of 1%

Using the 1%, you make $150k, tax is $1,500 - you spend $150k, tax is $1,500 - total tax $3,000.

No more IRS, no more reporting on 4/15 every year.

Yeah, some will cheat by using FRNs outside, but most will in-system.

Watauga's picture

As above, 100% incorrect.  The 1% is imposed on EVERY movement of money--many billions of such movements occur every day.  Trillions upon trillions in a year.  And each one taxed at 1%.  In fact, the number is, effectively, infinite.  This is a license for the govt to steal from you and impose absolute control of everything you do. 

gggunchi's picture

All this tax the rich to help the poor is getting really old.  I wish the politicians would realize that capatalism requires 3 classes of people ... the wealthy, the middle class, and the poor.  You try to eliminate one socio-economic subsegment you kill the whole thing . . . but then again look where we find ourselves today.  I also wish the population would realize that poverty is relative to purchasing power, and purchasing decisions.  The average person in poverty in the United States has air conditioning, a cell phone, and a flat-screen TV.  Having a hard time putting food on the table or keeping the electricity on . . . cancel xBox Live sell the TV. Ugh.


Drop that person in sub-sahara Afria, they are the top 1%.  Ergo, we should tax them more too. 


I swear to God, I hate politicians trying to buy their way into office by "Vote for me, and live the good live at the expense of all those guys leasing black BMWs and Audis and doing the 8 - 7 every day."



Coldfire's picture

Income tax is an emblem of slavery. We should be ashamed to submit to it.

Watauga's picture

And yet we do.  But why?  Because our govt tyranny will imprison us, or worse, if we don't.  And we thought we were free.

Lost Wages's picture

The only reason you pay taxes or rent or anything is because of the threat of force; cops with guns coming to take you to court or prison or evict you from your home.

Lost Wages's picture

Yeah. I was agreeing with you and restating you point, so try not to shit your diapers.

TheObsoleteMan's picture

Remember:"We have to pass the bill so we can see what is in it"? A natural consequence of socialized medicine is SOCIAL CONTROLS. That is what is coming next, and it will center around the creation of a series of "health" taxes. Imagine your doctor reporting your BMI, blood pressure, cholesterol and glucose numbers to a federal bureaucracy, who will tax you according to each. Already they are telling us what we should, and shouldn't eat and drink. Wait until that "should", turns to "must", and "shouldn't" turns into "must not". Bloomberg is already leading the charge. This is the nature of these people. They look at us with the highest of contempt. They know what is best for we mere mortals.Their appetite for power and control knows no bounds.

TheObsoleteMan's picture

You yankees and your love for big daddy gubmint, now you might REALLY get to pay for it. All of you are turning Florida into a shithole, just like the one you left behind. You can't help yourselves, it is all you know to do. I guess you will never see the light. Keep pulling that blue lever in the poll booths you dumb sum bitches.

Lednbrass's picture

They do it everywhere they go, they are human plague rats. They leave their shithole state, move to the South and immediately try to turn it into New York or Ohio.

Stay the hell where you are.

Arthur's picture

Been getting *ucked over by the AMT for a long time now.  Unfortunately we are "lucky" enough to just make enough for the hit.

Getting wacked with with the AMT these days just means you are working your butt off and if you live in a major metropoitian area are just  barely scrapping by to provide your kids with decent education, pay the mortgage and save for your retirement and the kids college fees.

Most AMT'ers are stuck, interesting and well paying jobs are hard to find in the hinterland.  For many it is well to do hand to mouth.

Make 100k to 750k a year and the Dems want to tax your ass but you are too much a piker to benefit from most Republican trickle downs.  To rich to be a Dem and too poor to be a Republican.

Remeber dividends are not taxed at the AMT rate, so if you are already wealthy you can just smile while those who have to work to generatedecent  incomes get skewered.

lakecity55's picture

yes! More taxes!

NYC becomes Chinee ghost town.

chop chop!

zorba THE GREEK's picture

My worthless A-hole accountant forgot to warn me about AMT.

It cost me a bundle. So I'm doing his old lady to get back at him.

I think he's a homo anyhow, so he probably doesn't give a s#%t.

Watauga's picture

Every household needs a second income nowadays.  How much are you paying her?

palmereldritch's picture

Naah.  It's just that he has a deduction for that

Rob Jones's picture

There may be a bit of brinksmanship, but the AMT exemption will be extended. Neither party wants a tax increase when it is so easy for the government to borrow whatever it needs. This is the closest thing to a "Blue State Tax" that you could possibly find. So if the Repubs were really serious about deficit reduction, they would embrace it. (They won't.)

The worst thing that will happen is that the FC fix might only come in early 2013, forcing lots of people to delay filing their returns.

Almost Solvent's picture

Bruce, most of us upstaters (that is north of Westchester) will not be hit by the AMT unless our property taxes are higher than normal for upstate NY.


Here in Monroe county, my meager $125k single family house property taxes total *only* about $5,000 per year for county, town and school.


I ran the AMT for shits and giggles based on my 2011 return and the result was actually LESS than what I paid in federal taxes in 2011.


It would benefit my family if I could choose to pay the AMT instead of the *regular* federal income taxes ($20k actual paid vs. $15k under the AMT for tax year 2011 based on our gross of $147k).

booboo's picture

I became half indian last year, life is good, smoke peace pipe, trade wampum. Great Black cheif in Washington send plastic card with numbers, trade for blankets and jerkey at walmart.

Fred Hayek's picture

Elizabeth Warren, is that you?

Oh wait, you said last year, not a decade ago when being a fake minority helped you climb the education cartel ladder.

JeffB's picture

How'd you do that?

Trade one of your parents?


Ar-Pharazôn's picture

you have to sell your soul.....

hannah's picture

"Note: I’m one of the suckers. I’ve been paying this for the last 15 years. It has added up to big bucks."

your problem is you dont make enough money. make more money so you can hire better tax people. the super rich dont pay AMT? no way the AMT exemption gets canned because all those $100k gov workers would get hit and those are obama voters.

nofluer's picture

"Hire better tax people"???


Sorry. Great advice, but it won't happen.

People are too stupid to do that. I used to be a tax preparer - BS degree in Accounting and tax specialist. Corporate, S-corp, Partnerships, and individual. My rates were reasonable, but after four years I closed it down because I couldn't even break even. Why? Because a farmer in the other end of the county and one of the School Lunch Ladies also "did taxes" - and "the people" preferred to keep going to them.

(Which was when I learned that people change accountants slightly less often than they die.)

Of the clients I had, I saved every one of them money over what they had done by H & R blockheads, and was familiar with the "disclosure of position" statements & etc. and used them. I had a tax service that sent me a CD EVERY MONTH with tax case decisions, TAMS, proposed tax law changes, etc. And I watched absolute idiots go to TAX LAWYERS for tax prep and get royally screwed!!! (Most lawyers - even tax lawyers - have accountants do their returns because they understand that going to court over a tax issue is not the same as knowing the tax codes and how to apply them.) And I saw one person who had always used a certain tax lawyer, get sold out by him to the IRS - and they thought the lawyer had done a good job!

But I couldn't even break even working out of my walk-in basement.

Most people who pay AMT are too stupid to hire a good accountant. I never once had a client who had to pay AMT - and I had some upper middle class clients. (My favorite case was a guy I advised who bought land during the depression and sold it for a huge percentage over his basis - and IF he followed my advice he would have paid next to nothing in taxes on the transaction.) ;-)


onlooker's picture

""Move to Texas, and have a pied-a-terre in Vancouver WA for the TX summers.""

How do you get food stamps in two states? Texas has Snap. Does WA have Snapple?

ElvisDog's picture

Naw, in WA you can just walk into supermarkets and steal food. Most chains up here have a "do not stop shoplifters" policy.

Amish Hacker's picture

My guess is that when so many people get reamed by AMT that it starts to cost politicians their jobs, it will be repealed... and replaced by a national VAT.

FleaMarketPete's picture

The problem with a national VAT is that it will be in addition to the AMT, not in place of.  The socialists would love nothing more.  Just like in Europe.

nmewn's picture

You're much better off up there BK...seriously, we got mosquitoes the size of humming birds down here and roaches, snakes, lizards, alligators and people from up there (from your neck of the woods who have migrated here) that can't even muster the strength to punch a ballot straight through anymore...completely drained of the stamina, blood & the will to survive it seems.

Pay the tax there...enjoy your life ;-)

Manthong's picture

Yum. It sounds like a lot of tasty protein is flying and crawling around in your parts.

FleaMarketPete's picture

#1 I could care less about Northeasterners getting fucked by the tax system because you vote for these scumbags and then whine when they turn you around and fuck you in the ass.  I'm not just talking about the inner-city crack heads that are voting for more welfare, but educated banksters like Bruce that pay $35K per plate for liberal fund raisers to re-elect these fuckers.  For real, water is wet.

#2 Why does the flat tax continue to go now where?  It's been talked about for 30 years now, at least from what I can remember growing up in Florida.  Why doesn't anyone support it?  The socialists douchebags complain that it isn't regressive enough, but a flat 20% - 25% effective rate seems a lot better than a 35% statutory rate and 15% effective rate.  Oh yeah, sorry lazy poor people and illegals, no more -10% effective rate for you.  You want big fucking government, you pay for it.