The Politico reports that "Senate Budget Committee Chairman Kent Conrad predicted that the budget pressures will force action on a major overhaul of the current tax system by 2010 or 2011." You don't often hear that, so it's worth unpacking for a second.
Len Burman, Director of the Tax Policy Center, recently released a report that laid this thinking out well. There are, he argued, a handful of "action-forcing" events that are going to focus the political mind on the inane way we fund our government. The most important of these is the Alternative Minimum Tax. The AMT is a sort of parallel tax track that ensures the rich pay at least some taxes. It wipes out deductions and closes shelters. If you qualify, and it's more than your tax burden under the normal system, you pay it instead.
The problem is that it's not indexed to inflation. Every year, more and more taxpayers are exposed to it. And every year, Congress passes a temporary fix to extinguish the potential outcry. But if they every stop passing those fixes, the sudden transition in the tax system would be violent. Absent another change in the law, 55 million Americans will be paying the AMT by 2018.
The fix to that seems easy enough: Congress should just reform the AMT. But this is Congress. Nothing is ever easy enough.