A nasty surprise awaits the middle class come tax day

Seattle Post-Intelligencer ^ | January 31, 2004

[sarcasm]

Beware: The alternative minimum tax could soon snag you.

The minimum tax, enacted to make sure that even the ultra-rich pay some income taxes, may hit 44 million households, including families making less than $50,000 a year simply because they have lots of children to claim as exemptions or take other tax breaks.

The non-partisan, private Tax Policy Center estimates the tax will:

• Add an average of $3,751 annually to a tax bill, with 52 percent of affected households making $100,000 or less a year.

• Let many ultra-wealthy people off the hook again: Only 24.3 percent of people making over $1 million will pay the tax by 2010.

Congress enacted the tax in 1969 amid reports that 155 ultra-rich Americans avoided paying a penny in income tax. The alternative tax has been on the books since then, never indexed to inflation.

The tax breaks President Bush and Congress enacted since 2001 expanding child tax credits and "marriage penalty" relief make it more likely taxpayers will owe the alternative minimum tax.

Bush called for permanent extension of these tax breaks in his State of the Union address but not reform of the alternative minimum tax, which denies families most of the Bush write-offs. The 2003 tax cut contains a temporary provision that will help many families avoid the alternative minimum tax through 2004. But repealing the tax entirely would cost the Treasury $600 billion in the next 10 years.

And there's insult to the injury, the IRS says:

• Taxpayers who might owe the alternate minimum will spend 12 hours more preparing their 2003 taxes. They will have to calculate taxes under two formulas requiring eight pages of instructions, a 12-line worksheet and a 65-line form.

• And when they're done, they must pay the higher amount. Many won't owe the alternate minimum tax -- but they'll still have lost a day figuring that out.

[petercooper]

I'm saying that if people put their kids in day care, they should NOT be able to claim a deduction for it. People who decide to take care of their own kids do not receive a deduction. That's all. So yes, people should pay to take care of their own damn kids, not me, by having their taxes reduced, and the overall tax pot smaller to be made up elsewhere (higher income taxes for me).

And I'm not a liberal.

[patton]

I don't make the rules, I just follow them - quit bitching at me and write your damned congresscritter.

[leadpenny]

Since you insist on going with the benefits side, I'll go with you. Here's what's not fair (I'm not sure what "fair" is). Using your $80,000 figure as the cap the maximum contribution would be $9,920 at 12.4%. Again, using your figure of someone making $8,000,000. They, too, would max out at $9,920 in FICA contributions. The difference is that they are not paying 12.4%. They are paying 0.124%. Not only is that not fair on the contributions side but they will have the same claim against the SS system as the person who's income was always at the cap. The wealthy person contributed at 1/100th the rate of the person making 80 grand.

I try not to put labels on the SSS even though it is a socialistic ponzi scheme that will eventually fail and/or bring our capitalistic system down first.

[Arkinsaw]

I'm saying that if people put their kids in day care, they should NOT be able to claim a deduction for it. People who decide to take care of their own kids do not receive a deduction.

Ah, since I do not get a deduction then nobody else should get one either.

That's all. So yes, people should pay to take care of their own damn kids, not me, by having their taxes reduced, and the overall tax pot smaller to be made up elsewhere (higher income taxes for me).

What a crock of royal BS. I bet you want to soak the rich to "make the overall tax pot bigger" so you won't have to pay as much. Jeez. When someone gets a deduction it is a reduction in the amount of THEIR money they pay to the government. THAT MONEY IS NOT YOURS. THAT MONEY IS NOT THE GOVERNMENT'S. How freaking hard is that. I can't believe I am hearing this from a so-called conservative.

And I'm not a liberal.

You can say that all day but you are playing liberal tax games and thinking of other people's money as your own. You are thinking of tax policy as a way to use other people's money to lower your own tax burden.

[petercooper]

I'm not one who wants to soak the rich. I just resent paying $40K-$50K in federal income tax, and do not agree with people claiming deductions for putting their kids in day care. I chose to do the responsible thing and take care of the kids at home.

So you are probably for universal day care- Why not support Dennis Kucinich.

[eddie willers]

Why should anyone pay a tax on their income?

Bingo.
Why punish production?

Does NOT make sense.

[Arkinsaw]

I'm not one who wants to soak the rich. I just resent paying $40K-$50K in federal income tax, and do not agree with people claiming deductions for putting their kids in day care. I chose to do the responsible thing and take care of the kids at home.

So you are probably for universal day care- Why not support Dennis Kucinich.

I just can't figure out why you are here complaining about someone's tax burden being less instead of over at DU. We like people's tax burdens being less over here you know. They want it to be more over at DU. If you think my tax burden is too low and somehow hurts you. TOO FREAKING BAD.

Let me tell you the conservative stance here. That is that every taxpayer should take EVERY deduction that they can take and EVERY taxpayer should get by with paying as few taxes as they can. In fact, it would be best if every taxpayer could only get away with paying only those taxes necessary for the government to carry out things that it was specifically delegated in the Constitution.

The problem here is that you begrudge your neighbor saving HIS OWN MONEY because you don't belong to the same class that gets the benefit. That is CLASS WARFARE. It is how the liberals divide the rich from the poor, the black from the white, and the parents from the non-parents.

You are looking at taxes like a liberal, as if somebody else getting a tax break hurt YOU.

You are afraid that someone somewhere is taking a tax deduction which will require the government to come get more of your money instead. Thats wrong-headed and assumes that the liberal view of taxes is the correct one.

But I am aware that you will never get over that particular brainwashing. But such a stance will not receive a favorable response from me and you won't have much luck trying to convince me that complaining about a family paying too few taxes is in any way conservative.

[petercooper]

Not here to argue with you, but yes if someone gets to claim a deduction for putting their kids in day care, we are all paying for it. It's quite simple.

And I am very conservative, thank you

[P.O.E.]

Tax code is like FDR's old WPA during the depression. It creates economic opportunity for thousands of attorneys, accountants, lobbyists, etc. - not least of which the legislators themselves - after all, it's where most of their money comes from (e.g., the infamous "special interests"). The biggest SCAM on the planet. As middlemen for your money, they scoop the cream off the top and leave you happy with your pittance - happy they didn't haul your butt off to jail or worse, to audit hell.

Expecting tax reform is like expecting them to perform do-it-yourself kidney removal on themselves.

[oceanview]

sell the stock, is that so difficult. alot of people have gotten burned big time using your strategy of exercising the option, paying the tax, and then holding a stock that was in the black and watching it fall until it wasn't. SELL THE STOCK.

[going hot]

Agreed. I have one. Costs me over 6 large annually. However, he more than makes for it with his strategies, all legal, just hard to find in the code.

[Binghamton_native]

Have you tried a "home-bookeeping" program such as Quicken? You categorize all expenses as they are incurred. You estavlish the tax consequences of each category at program setup. And in fact, Quicken data can be imported directly into Turbotax. There is no reason for a family with moderately simple finances to spend much time doing a tax return.

[cherry]

"Why should someone making a million a year pay the 6% social security rate when their benefits are capped?"

my benefits are capped, and I don't make a million...

besides, if the ultra rich Howood limosine liberals all had to pay the Social Security tax on all their income, sure as shootin' Social Security would be fixed immediately...

too many people that don't contribute the 8% on all their income are making the tax laws for the rest of us that do....

when you are making middle class wages, increasing taxation is of paramount concern.

Its just like if Congress had to pay into Medicare the same way as the citizens do,and accept all the limitations, believe me, Medicare would be fixed right away....

[Arkinsaw]

Not here to argue with you, but yes if someone gets to claim a deduction for putting their kids in day care, we are all paying for it. It's quite simple.

And I am very conservative, thank you

Its very simple. Conservatives do not complain about families paying "too few" taxes.

Someone saving THEIR OWN MONEY is not screwing you. That is a liberal concept.

[golder]

I just can't figure out why you are here complaining about someone's tax burden being less instead of over at DU. We like people's tax burdens being less over here you know. They want it to be more over at DU. If you think my tax burden is too low and somehow hurts you. TOO FREAKING BAD.

You just don't get it. I personally hope you never have to pay taxes. The problem, as I see it, is, as more and more special interest groups get special tax relief, the more they consider taxes fair, or even too low. Perhaps that is the problem for us that pay 50+% in taxes.

[Arkinsaw]

And I am very conservative, thank you

Not according to what you are saying here.

[Arkinsaw]

You just don't get it. I personally hope you never have to pay taxes. The problem, as I see it, is, as more and more special interest groups get special tax relief, the more they consider taxes fair, or even too low. Perhaps that is the problem for us that pay 50+% in taxes.

Conservatives do not complain about families paying "too few" taxes. Those that do, have a complete misunderstanding of how conservatives view taxation.

[Hank Rearden]

If you're going to steal my name, at least get the spelling correct.

[golder]

Conservatives do not complain about families paying "too few" taxes. Those that do, have a complete misunderstanding of how conservatives view taxation.

You seem to be agitated about some anti-family sentiments that the poster never intended. Again, the argument is very much larger.