Free Republic

In the arena of tax policy and tax reform the income tax deductions for Mortgage interest seems to be cast in stone and never to be touched. This is the one tax deduction every homeowner knows to include in his tax return and a benefit that the President has asked his tax reform panel to keep. Unfortunately, one Huge and growing tax issue hanging over the mortgage deduction is the Alternative Minimum Tax ( AMT). A tax hitting more and more Middle Class Americans where their Tax Accountant has to figure out their taxes 2 ways. Because AMT has not...

Is this tax trap waiting for you? By William Neikirk Tribune senior correspondent Sun Aug 21, 9:40 AM ET The AMT is coming after you. Congress passed the AMT, or alternative minimum tax, in 1969 to crack down on 155 super-rich people who had escaped paying taxes. But in the next few years, it will ensnare millions in the middle class and perhaps roil the nation's politics. This year nearly 4 million taxpayers are being hit by the AMT, but that number will soar to 20.5 million taxpayers next year and 51.3 million, or 45 percent of all taxpayers, by...

Historians might just view this week and next as the most propitious fortnight for tax reform in some time. First came news earlier this week that a presidential commission looks set to call for the abolition of the Alternative Minimum Tax. Then, next week, the House Ways and Means Committee in Washington will hear another round of testimony as it considers revamping our inefficient, outdated tax system. So we could be at the brink of progress.

When F. Scott Fitzgerald pronounced that the very rich "are different from you and me," Ernest Hemingway's famously dismissive response was: "Yes, they have more money." Today he might well add: much, much, much more money. The people at the top of America's money pyramid have so prospered in recent years that they have pulled far ahead of the rest of the population, an analysis of tax records and other government data by The New York Times shows. They have even left behind people making hundreds of thousands of dollars a year. Call them the hyper-rich. They are not just...

Give Senate Finance Committee Chairman Chuck Grassley credit for enthusiasm. On Monday, he and three colleagues introduced a bill to repeal the hated Alternative Minimum Tax, well before President Bush's tax reform commission reports its findings in late July. For readers unaware because they're lucky enough to live in low-tax states, the AMT is the parallel tax system designed some 35 years ago by Democrats to make sure the rich can't exploit too many loopholes. But because it isn't indexed for inflation it is sweeping up more and more middle-class taxpayers, especially in New York, California and other liberal states....

"A top Senate Republican challenged a crucial element of President Bush's budget and tax strategy on Monday, calling for a repeal of the alternative minimum tax at a cost of at least $611 billion over 10 years," reports the New York Times. "Senator Charles Grassley of Iowa, chairman of the Senate Finance Committee, has teamed with senior Democrats to introduce a bill that would repeal the tax and forgo hundreds of billions of dollars in additional revenue the tax is expected to generate." Chris Edwards, director of Tax Policy Studies at Cato and author of the Cato Handbook on Policy's...

A Senate Finance subcommittee opened hearings on the alternative minimum tax Monday, and they didn't start a day too soon for people in California, who pay a disproportionately large share of this creeping crud. In 2003, Californians filed 11.6 percent of all individual tax returns, but filed 20.1 percent of alternative minimum tax returns and paid a whopping 22.8 percent of the nation's entire alternative minimum tax, according to preliminary figures from the Internal Revenue Service. Three of the big things that can throw a household into the alternative minimum tax are high state and local taxes, large families and...

The alternative minimum tax (AMT) -- which one Democrat compared to the villain of "Star Wars" -- should be repealed this year, the chairman of the Senate Finance Committee said yesterday. Sen. Charles E. Grassley, Iowa Republican, said he would not wait for President Bush to propose reforms to try to do away with the tax, which was originally aimed at the very rich, but increasingly affects many middle-class families. "From my standpoint, AMT can be resolved in tax reform, but tax reform should not be the only avenue for resolution. I'll be looking for the earliest legislative opportunity to...

WASHINGTON - Lawmakers have been building temporary dams to hold back the alternative minimum tax. Now, a bipartisan group of senators wants to eliminate the levy, originally aimed at wealthy tax dodgers, before it rushes into the middle class. Four senators — two Republicans and two Democrats, including the leaders of the Senate Finance Committee — hope to force serious discussion about altering or abolishing the levy by introducing a $611 billion bill to repeal it. "We're saying, in our bill, is that this ought to be at the top of the list in terms of tax reform," said Sen....

It was intended to catch wealthy tax dodgers, but instead has crept closer to the middle class over the years. So a bipartisan group of senators wants to eliminate the alternative minimum tax even though it would deprive the government of billions of dollars in revenue. Four senators - two Republicans and two Democrats, including leaders of the Senate Finance Committee - planned to introduce a $611 billion bill this week that would repeal the tax. The committee scheduled a hearing Monday to examine the uncontrolled expansion of the tax. "It's become mainstream," said the committee's chairman, Sen. Charles Grassley,...

WASHINGTON (Reuters) - It is called the "stealth tax" because most U.S. taxpayers are unaware of it, but in a few years, millions of people will pay the so-called alternative minimum tax that only the rich were supposed to pay. The alternative minimum tax, or AMT, was enacted in 1969 amid reports that 155 taxpayers making more than $200,000, a tidy sum at the time, paid no taxes at all because of deductions and other income tax exemptions. But what started as a tax to ensure that the wealthiest Americans did not escape paying federal taxes soon will hit more...

After three years of rising federal budget deficits, a surge of April tax receipts brought unexpected good news to fiscal policymakers -- the tide of government red ink appears to be receding. The Treasury Department this week reported there would be a $54 billion swing from projected deficit to surplus in the April-to-June quarter, after an unanticipated gush of tax payments poured into the Treasury before the April 15 deadline. That prompted private forecasters to lower their deficit projections for the fiscal year that ends in September. Budget analysts inside and outside the government said the positive turn is likely...

WASHINGTON -- Every April 15, Americans are reminded just how much they dislike paying taxes on their income. Philip Priddy is still paying off a $220,000 tax bill on money he never made. Priddy, a Baton Rouge sales manager for Nortel, was forced to liquidate his savings, sell his boat and his wages are still being garnisheed by the Internal Revenue Service to pay off his debt. Although an extreme example, he is among a fast-growing segment of Americans who are feeling the pinch of the Alternative Minimum Tax, or AMT. The tax originated in the late 1960s to target...

...[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...

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. Their own constituents will be demanding some relief. So far this year, Republicans are again proposing a temporary AMT fix that would spare some taxpayers from its clutches for another year or two. But maybe they should instead let this class-war Frankenstein continue to terrorize the liberal countryside until Democrats have no choice but to support major change when the President's Tax Reform Commission reports in July. Who knows, this entire AMT experience might even...

The Alternative Minimum Tax sounds pretty innocent. It's not. For some taxpayers, this federal tax, known as the AMT, is adding dollars to their total tax bill this year. This obscure tax was once meant to target the wealthy, those who had so many tax shelters they barely paid any taxes at all. That was 1970, when 19,000 people paid the AMT, its first full year of existence. Nowadays, 3 million people pay the AMT, and that number is expected to go up considerably in the next few years. An estimated 35 million taxpayers may pay the AMT by 2010....

Now that April 15th is almost here, you're likely to be either licking your wounds from filling out tax returns or obsessing about the imminence of tax day. Maybe even both. < snip > Now, let's look at Bush's tax "reform" commission. Instead of letting the commission propose the best possible tax system, Bush has hemmed it in. < snip > So I'll bet my (nonexistent) refund the tax "reform" proposals will go something like this. Leave Bush's existing tax cuts in place. Eliminate the estate tax. Eliminate some or all of the remaining taxes on income from investments. Eliminate...

Tax experts have long complained that the alternative minimum tax is a "stealth tax increase," one that Congress never intended and that is likely to catch millions of taxpayers by surprise. But a tax increase through tax reform could be even stealthier. If the alternative tax is reduced, the offsetting revenue increases are likely to be buried in so many other changes that most people would never know what hit them. Seen or unseen, the looming tax increases are almost as large as the president's tax cuts. Leonard E. Burman, a senior fellow at the Urban Institute, estimated that the...

Proponents of unlimited tax and spending increases stumbled on a rhetorical gimmick for blaming President Bush for the foibles of his Democratic predecessors. A New York Times editorial, "Mr. Bush's stealthy tax increase," claimed, "President Bush is presiding over a big middle-class tax hike." That is because rising nominal incomes will push more and more taxpayers into the "alternative minimum tax" (AMT). Such partisan complaints are ironic because the AMT was invented by Democrats to squeeze more taxes from the rich. It does so by denying those with higher incomes deductions and personal exemptions available to other taxpayers -- that...

Mr. Bush's Stealthy Tax Increase President Bush is presiding over a big middle-class tax hike. As recently as 2000, only about one million taxpayers owed the alternative minimum tax, created by a provision in the federal tax code that is supposed to prevent multimillionaires from using loopholes to avoid paying their fair share. But by the time Americans file their 2005 taxes, some 3 million taxpayers will owe the alternative tax and by 2010, nearly 30 million taxpayers will be hit - among them, a staggering 94 percent of married filers who have children and make $75,000 to $100,000. Big...