Posted on 02/23/2007 4:40:20 AM PST by shrinkermd
As tax season nears, Democrats in Congress are discovering they have an urgent political bomb to defuse -- the alternative minimum tax. The AMT already hits four million Americans, and without new legislation this year it will explode in the pocketbooks of 23 million taxpayers
What's amazing is that many Democrats and reporters are trying to blame this looming tax increase on the 2001-2003 tax cuts. See if you can follow their argument: Taxpayers are obliged to pay the higher of their tax bill under either the regular IRS code or the AMT. And because the tax cuts reduced the regular income tax of the average family by $2,000 a year, more middle-class families are being bounced to the AMT system.
This logic requires overlooking that a taxpayer's bill under the AMT is still lower than it would have been without the tax cuts. But never mind: The political game here is to use the AMT as an excuse to justify repealing the Bush tax cuts.
In reality, the AMT is one more liberal monster that was created in the name of soaking the rich but has now come back to swallow the middle class. Democrats created the AMT in 1969, to capture a mere 21 millionaires who had paid nothing.
...A Joint Tax Committee (JTC) analysis requested last year by Senator Charles Grassley of Iowa shows that about 11 million more Americans will have to pay the AMT next year thanks to the higher post-1993 AMT rates. The House Ways and Means Committee calculates that if you live in a high-tax state (such as California or New York) and have two or more kids, you're very likely to be hit with the AMT this year even if your income is as low as $75,000.
(Excerpt) Read more at online.wsj.com ...
The AMT in fact impacts only those in the top 20% of income.
If the Democrats want to tax the rich, well, that's just what it does. This is the group they would have to tax if they wanted to raise more revenue.
There used to be a Frreper named "AlGoreThinksImRich". Haven't seen much him recently.
Wiki's saying that top 20% of households are those who make 88k and up. I wouldn't consider that 'Rich'
Democrats certainly do. Out of one side of their mouth they bemoan the state of the middle class and out of the other call them rich in order to tax them more. Of course, if you asked a Democrat who specifically constituted the middle class they would probably tell you anyone making $20,000 or less.
Well, according to the article: The House Ways and Means Committee calculates that if you live in a high-tax state (such as California or New York) and have two or more kids, you're very likely to be hit with the AMT this year even if your income is as low as $75,000.
The "problem" is that it is hitting the blue states disproportionately. Remember, in Dems' eyes people like the Kennedy Klan aren't rich while a Nebraska farmer is.
In other words, me.
Why don't you read the tax law as it applies to those 18 and under?
You might be surprised that income of $ 40,000 can double the regular tax with AMT tax.
The IRS applies the tax based on proportions, not real dollars. I was hit with the tax 5 years ago with a gross income of 35K. This was after the IRS computed my initial tax return. They came back a year later and did a recompute applying AMT and socked me for an additional 5K plus penalties and interest.
They won't fix AMT. They can't afford to. That's why the premptive "Blame the Bush Tax Cuts" campaign is underway - the only place to get the money for those massive social spending schemes is from the 75K to 200K wage earners and they have to hope that at least the dumber members of that class will shut up and pay and not start blaming Democrats for the sudden tax hike.
Ultimately, less revenue.
Not really! ANYONE can wind up in AMT territory now! I have a Grandson who, paying state income tax through the nose (with a salary of about $50K/annum) has entered AMT territory this year due to large casualty losses and his having sold off some property at a capital gain to rebuild! While his net worth declined as a result, he became RICH in the view of the AMT!
The AMT is really arcane in its computation..., most folks don't even think about it until they are told by their tax preparer or the IRS that they owe it!
Exactly. Their economic background goes no further than a few (losing) games of Monopoly.
I never understood why state taxes were deductible in the first place. Why should people in states with low tax rates, and fewer government services, subsidize states that have elected to pursue local socialism?
The answer is simple. Little, liberal states and a few big ones have the votes in the House and Senate to determine this. You are right. The big spending states are subsidized by the more frugal states because of the deduction of state and local taxes.
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