Ritholtz at Big Picture gives Us the basic consensus of his Thoughts on Taxes. I agree with the greatest part of what he said, though I can find no reason not to raise Capital Gains back to the realm of taxation of the Reagan later Years. No one I have found as yet can find an actual numerical increase (percentage or real levels of Investment) sufficient to justify the tax revenue loss. I actually define a misanthrope level of Investment simply to avoid Taxes, which adversely alters the allocation of Resource. I most adamantly agree that Taxes are not too high, and actually should be somewhat higher; remember that I am a Radical, one who believes Corporate Income Taxation should resume their subscription of much of the Expenses of Government, say around equality with Personal Income tax.
The only basic fix to the AMT (Alternate Minimum Tax) is making Everyone subject to the Tax. It will nullify the Bush Tax Cuts, a state necessary to any balance to the Federal Budget; a reality accepted by all Students of the Problem. By the way, the AMT simply forestalls the excessive utilization of Tax loopholes by the Taxed; it never stipulated what economic Class they would belong within, only that Everyone should pay a relevant level of Tax. Much as current entrants to the AMT realm would like to cite otherwise, it is still doing a fairly good Job of accomplishing what it was designed to do. Lack of knowledge does not nullify the commission of a Crime; pretense of insufficient funds will not nullify the impact of the AMT.
Pay-As-You-Go actually does not work, and has never worked. The reason: Pay-As-You-Go is never enacted until the Federal Budget is already in crisis, never adopts a program to reverse the adverse effects already engendered, and always develops Loopholes to avoid enforcement of the Rule. I prefer a radically reactionary effort: All Federal Budgets and Programs to be cut 5% per year, until Federal Expenditures equal Federal Tax revenues. No Program Budget may be increased over these limits, without Congressional Review in Committee, and passage in Read-Out to the general Congress. Government Contractors could integrate this consistent Downsizing of Federal Expenditures, Congress would have to provide exception to the more popular Programs before the lesser or unknown Graft systems, and many obsolete Programs would remain permanently reduced. The yearly reductions would insist that Congress streamline their legislative program, and abandon their ridiculous omnibus Bills.
Correction of the Federal Budget process requires a Hardline enjoinment of Pork barrel politics, which is not touched with Pay-As-You-Go. Effective Tax rates and Creative Destruction will balance the Budget, and probably with less lethality than will commonly claimed. It is the time to act. lgl