Okay, sit down for this bit of heresy from me:
Keep the Alternative Minimum Tax (AMT)!
I dislike the AMT as much as the next guy, as it nicks me pretty hard every year. But one reason Democrats are terrified of it is that it hits hardest the high-tax blue states, which typically have higher state income and property taxes that can’t be deducted under the AMT, such as New York and New Jersey. As such the AMT is a modified flat tax.
Cast your mind back for a moment to the debate over the original Reagan tax reform proposal of 1986. Reagan’s first plan would have ended for everyone the deductability of state and local taxes in return for lower rates across the board. The chief opponent of this was New York Gov. Mario Cuomo, who knew that it was a de facto tax hike for New Yorkers. The point is, deductability of state and local taxes is a de facto federal subsidy for high tax states, and therefore a buttress for liberalism.
Reagan’s original proposal was dropped, but the non-deductability of state taxes lived on in the AMT, and is now biting blue state folks hard since it was not indexed to inflation.
Pat Buchanan, in 1986 Reagan’s communications director, got the matter right with this pungent comment in defense of Reagan’s initial proposal: “We do not believe in a neo-socialist approach to government that redistributes wealth. This plan will force people to take a second look at government and see what they are getting from it.” Cuomo called it “wrong, insulting, unfair, and denigrating.” Heh: That’s why I like it.
It is fun watching liberals squirm over this. They hate to give up the money, but their own constituents will be increasingly up in arms so long as the AMT lasts. It can’t be "patched" every year forever. Look for the Democratic Congress to repeal it outright before long.