As the nearby chart shows, on present trend the AMT will hit an estimated 3.8 million taxpayers this year, 20.5 million in 2006, and 34 million by the end of this decade. By 2009, the AMT will collect more revenue than the regular income tax.
Posted on 04/15/2005 5:27:25 AM PDT by OESY
...[T]he AMT is a kind of IRS surprise double jeopardy. Claim too many deductions against a high income under the regular tax code, and the AMT sweeps you into its maw lest you pay too little tax. Less well known is that the AMT was created in 1969 amid one of Washington's periodic class-warfare pandemics....
The AMT... like many soak-the-rich schemes... captured only a small number of taxpayers at first. But because it wasn't indexed for inflation, and because prosperity has lifted the incomes of so many Americans, the AMT has begun to pinch millions and now threatens the middle class....
[T]he AMT is biting hardest in the most liberal, high-tax states. That's because the AMT doesn't allow deductions for state and local taxes the way the regular code does. So middle-class taxpayers in New York, California and other states with high income-tax rates are getting hit sooner.... It is the ultimate blue-state tax.
This helps to explain why people who normally thrill to higher tax rates are suddenly up in arms. Liberal newspapers are now denouncing the AMT as a "tax increase" and blaming the White House for not doing more to stop it. "The AMT needs to be fixed," moans Senator Barbara Boxer's spokesman, in what has to be a tax-reform first. "We need to address the AMT, which is trickling down to catch more and more middle-class families in New York," says Empire State Senator Chuck Schumer....
We could ask why these Senators don't merely call for lower taxes in their own states. But let's be generous and congratulate the prodigal liberals for joining the broader cause of tax reform....
As for the politics, the silver lining of the AMT is that it will drive blue-state Democrats into the tax reform debate later this year....
(Excerpt) Read more at opinionjournal.com ...
Democrats always ask how we're going to "pay for a tax deduction" (a rhetorical question because tax cuts end up generating more tax revenues because of the stimulation to the economy) . That question should be tossed back in their faces on this one as well and see how they stutter.
You don't understand...liberals are all for tax increases and increased spending...as long as it is not their money.
What the libs fail to acknowledge is that Bush's tax cuts for the rich never happened. The cuts under the conventional system were just replaced by the AMT. I am having a bad April thanks to this phenomenon.
Excellent point! (Sorry about the tax hit on you, though)
I cannot agree with that.
The top rate for the rich fell from 39.6% to 35%. They are not subject to the AMT, because 35% is higher than the 26/28% AMT rate. If there income is dividends or capital gains, it is still taxed at 15%.
If there was a graph of the number of AMT payers vs. income, you would see the numbers drop to close to zero after about $500-600K in AGI.
35% can becomes 26% or less when deductions are added for state and local income & property taxes. These are not deductible under the AMT. For some bizarre reason interest payments on vacation homes are deductible under the AMT.
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