Posted on 07/24/2007 7:49:21 AM PDT by commish
WASHINGTON – Working middle-class families threatened by the Alternative Minimum Tax (AMT) next April would save money under legislation introduced today by U.S. Sen. Jeff Sessions (R-AL).
Sessions’ bill, the Saving Families First AMT Relief Act of 2007, would allow taxpayers to claim personal exemptions under the AMT to reduce their taxable income subject to the alternative tax rules.
Current law prevents AMT taxpayers from claiming personal exemptions, as most taxpayers do under normal tax provisions. The personal exemption in the 2007 tax year is $3,400 per person.
“By allowing personal exemptions under the AMT, we will be providing tax relief for the hard-working American families that deserve it the most,” Sessions said. “The real solution to the AMT problem is comprehensive tax reform, but there is little appetite in Congress for such an effort. Until major reform becomes a reality, my bill will provide a more permanent, pro-family solution to the AMT problem.”
Nineteen million additional Americans are now subject to the onerous AMT after the expiration of a temporary “AMT patch” last year. Without new legislation, these taxpayers will face significantly higher tax bills during next April’s tax season.
Sessions’ legislation would also index the AMT exemption to inflation starting in 2008, eliminating one of the primary reasons why more Americans are vulnerable to the AMT.
The Alternative Minimum Tax was instituted in the late 1960s to prevent wealthy taxpayers from avoiding any tax liability. However, a larger number of middle-class taxpayers have been forced to pay higher taxes under the AMT each year because the AMT exemption was not indexed for inflation.
Democratic leaders in the Senate are reportedly hoping to pass another AMT patch by the end of the year. In addition to saving the U.S. Treasury billions of dollars compared to such a temporary fix, Sessions’ legislation would provide a more permanent, principled solution to the AMT problem.
BTW, have I mentioned how much I love my Senator.
Question. If regular tax rates were lowered until everyone was paying the AMT, wouldn't we have the "flat tax" that everyone here seems to be calling for?
My wife and I got hit with the AMT is 2006. We were, according to the Dems, trying to dodge our fair share of taxes by taking a deduction for over $20,000 of out of pocket medical expenses. It cost us an additional $1400 in tax.
DITTO!
I do wish he would introduce an illegal immigrant deportation bill too.
Nothing has changed in regard to immigration since the Amnesty Bill was defeated. They're still here and they're still coming.
What would be fairer would be to eliminate all deductions and exemptions, drop the AMT, and adjust to lower tax rates. You could drop every tax bracket by 5% that way and still raise the same revenue.
The government should not be engaging in social engineering.
Charging more taxes to people without children than people with children is the epitomy of social engineering.
Charging more taxes to people that choose to rent than take on a mortgage is also social engineering.
You may think those social goals are good things, but that doesn’t change the fact that it is government interfering in people’s personal life choices. That is a slippery slope that accepts the concept that the government knows what’s best for you.
People should have families because they WANT families and the joy of having children is worth the expenses associated with larger homes, schooling, etc. They shouldn’t rely on government tax incentives to do that. Same with home ownership — people should buy a home because it builds equity, and not be influenced by tax considerations.
“Sessions’ legislation would also index the AMT exemption to inflation starting in 2008, eliminating one of the primary reasons why more Americans are vulnerable to the AMT.”
That right there is probably the most important piece of the legislation. You don’t necessarily need to have personal exemptions... raising the AMT exemption and adjusting it yearly works just fine...
In reply to Kellis91789, I don’t think you can begrudge individuals or families for receiving a $3,400 per person per year exemption from taxes to live on. (minus any payroll taxes for social security and medicare). Have a heart! This is NOT social engineering.
What is social engineering, is the “marriage penalty” embedded in the Alternative Minimum Tax. A two wage-earner married couple stands to loose $22,500 in exemptions under the 2007 AMT compared to two single (or divorced) people living together.
Due to a long term capital gain this year, my AMT exemption progressively phases out and I will be faced with a marginal tax rate of 35% on my ordinary taxable income under the AMT. Without the AMT, my marginal tax rate on ordinary taxable income would have been 15% - the same as the capital gains tax rate.
Unless Congress acts, this stealth AMT tax will cost me an extra $4,000 this year. The Republicans, while in control of both Houses and the Presidency, had six years to replace the Alternative Minimum Tax with something fairer and less arbitrary. But they did not and stand to get all the blame if the Democrats block any reasonable efforts at reform this year.
“Have a heart! This is NOT social engineering.”
What do you suppose “social engineering” means ? It is some entity (in this case government) attempting to use a system of rewards and punishments to influence people’s behavior toward some desired outcome.
In the case of families and children, government has attempted to reduce the cost of taxes as compared to childless people. You may think that is a good thing for society, or you may not. Your feelings on the matter don’t change the fact that it is social engineering.
Aren’t the joys of having a child enough ? Why support a tax structure that requires your neighbor to pay higher taxes to support your life choices?
For thousands of years, people had families without any tax incentive to do so.
Between the $3,400 Exemption and the $1,000 Tax Credit, plus similar State Income Tax breaks, a child might be worth $200/month in tax benefits. That may not sound like much to you, but there are people that could not afford another child without this benefit. So the government has seriously influenced their decision making process. Families likely to be influenced this way are the poorest and least educated. Which means the government is encouraging unnatural high population growth amongst the poor. Worse, the likelihood is high that this group of families will never really be able to afford that extra child without additional assistance like foodstamps, medicaid, school lunch programs, housing assistance, etc. Why do you suppose government would want to do that ? Maybe because a larger population of people dependent on government means job security for politicians and government flunkies ?
So what seems like a modest help to middle-class and high-income families is a distorting influence on the lower-income families and the choices they make. Those choices cost everybody today in higher taxes and in the future by virtually guaranteeing more people dependent on big government.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.