Congress Passes Temporary Fix for the Alternative Minimum Tax
In case you haven’t heard, Congress pushed through a one year stay of execution for millions of middle class tax payers that otherwise would’ve been snagged by the Alternative Minimum Tax (AMT). Without this fix, the number of filers subject to the AMT in would’ve jumped from 4 million in 2006 to 25 million in 2007. That’s the good news. The bad news is that the fix: (1) is temporary, (2) adds roughly $50 billion to the federal deficit since it’s not being offset by increased taxes in other areas or decreased spending, and (3) will delay tax refunds for as many as 38 million filers because the action was taken so late in the year.
[Source: NY Times]
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Good to know, but what is the AMT?
Comment by Steve — Dec 20th 2007 @ 3:36 pmIt’s an antiquated parallel tax system that is designed to keep the uber-wealthy from paying to little in taxes. Unfortunately, it’s not tied to the inflation rate, so more and more middle class families are being caught by it. I’ll be writing more on this topic soon, so keep an eye out.
Yes, and it hits those of us who live in high-tax states especially since for some reason AMT creators thought that only the rich take state income and property tax deductions. Also those who have lots of kids since only the uber-wealthy take exemptions for kids…
Comment by kitty — Dec 20th 2007 @ 4:52 pm::sigh:: If they would just index things like this to inflation when they start…
Comment by Ryan S. — Dec 20th 2007 @ 6:16 pmKitty: Tell me about it… We have four kids, and we’ve also experienced an uptick in income, so I’m a bit nervous. But at least we’re not in a high income tax state.
Ryan: You’re exactly right. If this was indexed to inflation, nobody would be sweating it right now (except those for whom it’s intended).
It’s so funny that so many things weren’t tied to inflation, as if that concept is so new…
Comment by jim — Dec 20th 2007 @ 7:00 pmEh, it’s better than nothing…I’ll take it.
Comment by Matthew Paulson — Dec 20th 2007 @ 8:23 pmI’m not too familiar with AMT but if everyone is saying that the problem would be fixed by having it indexed to inflation, why isn’t the fix to just add all the years of inflation from 1969 from this point forward?
Comment by MoneyNing — Dec 21st 2007 @ 1:47 pm