Fixing the AMT problem

[CPA]

Originally posted by: shira

Originally posted by: CPA

Originally posted by: Craig234

Originally posted by: CPA

Originally posted by: Craig234
I think Senseamp nailed it.

Funny how only one side is 'playing politics'.

I'm not sure of the exact distribution of the AMT, but perhaps the dems feel it's better to leave it in place in the short term as it creep down too low, in the interest of slightly reducing the terrible Republican policy of hugely excessive borrowing instead of balancing the budget. I can't blame them a bit for that if it's the case since Republican block any fiscal responsibility.

But it would be good to see the AMT fixed, indexed to inflation, and the tax rates fixed as well, i.e., some of the cuts for the top below the levels needed for fiscal responsibility repealed.

25M taxpayers. That's the distribution. And yep, I'm one of them if this doesn't get fixed. And, no, I'm not rich, I'm not in the top 5% of all earners, believe me.

25M is not a distribution. What is the range of income of the 25M, how much more tax will they pay than if this were repealed, where does this 25M fit in to the total base?

Again, I'm in favor of fixing this, but I'm also interested in the large debt problem we have.

I can give you my numbers. For 2007 I will pay more than $5000 in additional tax if the AMT is not at least fixed to the 2006 levels. It basically increases my taxes 25%.

I know the $$$ effect is out there. I'll see if I can find it.

What you've written doesn't jibe: If $5,000 represents a 25% increase in your federal tax, then that means your normal federal tax is $20,000. Assuming you're married filing jointly, that means a TAXABLE income of about $109,000. And you say "I'm not in the top 5% of earners." Hmm.

For your AMT to be $5000, that means the tax calculated on the 2006 AMT form (6251) was $25,000. At the 26% AMT rate, your AMT taxable income therefore was $96,000. That means a total AMT income of almost $160,000 (AMT exemption amount for married/filing jointly was $62,000 in 2006).

So you're household income is at least $160,000, which is already at the 95th percentile of U.S. household incomes. However, since AMT doesn't negate personal exemptions ($3400 a pop), that's another $7,000 (you and your wife, assuming no kids). And let's assume a middling home mortgage interest deduction of $12,000 (also deductible under AMT) - now you're at almost $177,000+. $200,000 is in the top 2.7% of U.S. household incomes, so I have a hard time believing the "not top 5% statement." And since you added "believe me," it sounds like you're not even close to the top 5%. Hmmm.

But maybe you're single, which would lower the number somewhat. Still, it's hard to reconcile the $5,000 = 25% and "not top 5%, believe me" statements.

Also, note that if AMT tax is assessed based on "AMT deferral items" (for example, company stock options that have been exercised), the extra tax you pay based on those deferral items can be credited in future years against the normal tax owed on those stocks. So you'll recoup some of the extra tax.

It was more like a $4500 swing and looking at the census numbers (something I admittingly didn't do before posting this) I am close to the 5%, but not quit there. I hope I am one day. I have 4 kids and both my wife and I work, which is a shame. It's a shame that because we both work and worked hard to get where we're at we get to pay additional taxes.

The problem, though, is that if there isn't something resolved, the AMT exemption reverts back to 1990s amounts. That's how this will pull in 25M additional people and that's not what this tax was supposed to do.

 

[cliftonite]

Originally posted by: Genx87

Originally posted by: cliftonite

Originally posted by: CPA
Baucus rejected that plan but said it was a constructive beginning. Reid, accusing Republicans of stalling so Democrats would get blamed for failing to act on the AMT, moved to hold a vote, probably on Thursday, on cutting off debate and proceeding to the House bill.


bwahahahahaaha, cry me a river Reid, of course, it's the Dems fault. You're playing a shell game using the "revenue neutral" mantra instead of understanding the money from this abomination of a tax was never meant to collected in the first place. Hey, here's a thought, if you would control your spending you wouldn't even have to worry about being revenue neutral, now would ya?[

Hard to control spending when the command in chief requests tens of billions every now and then for his false war isnt it?

Find a new excuse please.

It is a start.

 

[CADsortaGUY]

sign of progress?

Maybe they'll actually get this done.

 

[Fern]

Majority Leader Harry Reid, D-Nev., reluctantly allowed a vote on a long-debated middle-class tax cut that would add billions of dollars to the deficit because it is not offset elsewhere.

The measure, which the Senate approved 88-5, would prevent the alternative minimum tax from hitting about 25 million more taxpayers, at a cost of about $50 billion to the U.S. treasury next year.

Remarks and/or reporting like that annoy the h3ll out of me.

To call keeping the AMT at '06 levels a "tax cut" is BS by any measure.

I know they play games with such terminolgy all the time, but this is outside even those boundaries. When expiring provisions, such as the Bush tax cut, aren't renewed those are called tax increases. Current levels of taxes would increase, so I assume that's why the terminonlogy is used.

Here, however, current levels (i.e., '06) would remain the same if the bill is passed. Same != tax cut. If that were the case, we've had a "tax cut" every year since the last tax bill because taxes/rates have stayed the same.

I still contend that they don't need to apply "revenue neutral" here since after the new bill AMT '07 = AMT '06. That sounds about as neutral as one can possibly get.

OTOH, to allow the rules to revert to '90 levels thereby increasing AMT revenue by 50 Billion is hardly revenue neutral and would provide them (Dem Congressional leaders) with a nice big chunk of money to spend elsewhere. To be neutral, they'd have to spend it.

CAD, I'd be pretty confident you'll see AMT fixed, if this article is correct and AMT will hit an additional 25 million middle-class taxpayers - VOTERS - they'd be crazy to let that hit in the '08 filing season right before elections.

Fern

 

[FoBoT]

consumer spending in Q1 2008 is going to nose dive if they don't let people get the big refunds they are expecting

economy will tank just in time for the elections in Nov. :laugh:
maybe peope will throw the bums out of congress, finally

 

[shira]

Originally posted by: Fern

Majority Leader Harry Reid, D-Nev., reluctantly allowed a vote on a long-debated middle-class tax cut that would add billions of dollars to the deficit because it is not offset elsewhere.

The measure, which the Senate approved 88-5, would prevent the alternative minimum tax from hitting about 25 million more taxpayers, at a cost of about $50 billion to the U.S. treasury next year.

Remarks and/or reporting like that annoy the h3ll out of me.

To call keeping the AMT at '06 levels a "tax cut" is BS by any measure.

I know they play games with such terminolgy all the time, but this is outside even those boundaries. When expiring provisions, such as the Bush tax cut, aren't renewed those are called tax increases. Current levels of taxes would increase, so I assume that's why the terminonlogy is used.

Here, however, current levels (i.e., '06) would remain the same if the bill is passed. Same != tax cut. If that were the case, we've had a "tax cut" every year since the last tax bill because taxes/rates have stayed the same.

I still contend that they don't need to apply "revenue neutral" here since after the new bill AMT '07 = AMT '06. That sounds about as neutral as one can possibly get.

OTOH, to allow the rules to revert to '90 levels thereby increasing AMT revenue by 50 Billion is hardly revenue neutral and would provide them (Dem Congressional leaders) with a nice big chunk of money to spend elsewhere. To be neutral, they'd have to spend it.

CAD, I'd be pretty confident you'll see AMT fixed, if this article is correct and AMT will hit an additional 25 million middle-class taxpayers - VOTERS - they'd be crazy to let that hit in the '08 filing season right before elections.

Fern

My understanding is that the new bill increases the exemption amounts for 2007 over those from 2006. The latest text I've seen is:

Tax Increase Prevention Act of 2007 (Engrossed Amendment as Agreed to by Senate)

SEC. 2. EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX EXEMPTION AMOUNT.

(a) In General- Paragraph (1) of section 55(d) of the Internal Revenue Code of 1986 (relating to exemption amount) is amended--

(1) by striking `($62,550 in the case of taxable years beginning in 2006)' in subparagraph (A) and inserting `($66,250 in the case of taxable years beginning in 2007)', and

(2) by striking `($42,500 in the case of taxable years beginning in 2006)' in subparagraph (B) and inserting `($44,350 in the case of taxable years beginning in 2007)'.

That is, the AMT exemption amounts are being increased by 5.9% for married/filing jointly and 4.4% for singles. This greater-than-inflation increase was used because merely increasing brackets to match inflation would still have caused increasing numbers of middle-class taxpayers to be caught by the AMT.

 

[BoomerD]

I'm curious about something...if this wasn't important enough for the republicans to fix during the six years they held a majority in Congress, PLUS the presidency, why is it so important now that the Dems have the majority of Congress?

YES, I believe the law needs to be fixed...it's grown into a monster that is affecting people it was never meant to...and that's wrong.

I just wonder why all of a sudden, it's the Democrat's fault for not fixing it, when the Repubs didn't fix when they had the majority?

 

[FoBoT]

Originally posted by: BoomerD
when the Repubs didn't fix when they had the majority?

this link shows the various bills introduced since the last reform was passed in 1999

http://www.reformamt.org/legislation.php

 

[1EZduzit]

Originally posted by: 1EZduzit

Originally posted by: CADsortaGUY

Originally posted by: CPA

Originally posted by: senseamp
Because it has to be revenue neutral so it doesn't add to the deficit.

Here we go again. The AMT was not supposed to be applied against this low level of income. It is not adjust for inflation. So why is it necessary to be revenue neutral?

Why is it necessary? It isn't, but it's a good excuse(read "cover") for the dems to raise other taxes instead of lowering spending.

How are we going to lower spending with the inflation that we now have? And it's going to get worse too, look at the subsidy the taxpayers are going to have to shell out for the people who bought too much home and now can't pay for it.

<crickets>

 

[3chordcharlie]

Originally posted by: FoBoT
consumer spending in Q1 2008 is going to nose dive if they don't let people get the big refunds they are expecting

economy will tank just in time for the elections in Nov. :laugh:
maybe peope will throw the bums out of congress, finally

And vote in 'the other party'?

You'll never solve anything that way - it's hard enough to get the momentum for change when your system doesn't lock out new parties.

 

[CADsortaGUY]

Dems content with massive tax hike?

Wow, color me shocked. The dems look like they may let this one slide so they can spend the tax increase. There is no doubt they could have something passed immediately if they wanted to(since both Reps and Dems say they want to get it fixed) but it seems the dem leadership is looking to let the tax increase hit.

 

[Genx87]

Typical. Real champions of the american people right there by allowing a tax crafted specifically for the rich to filter down into the middle class.

 

[dmcowen674]

Originally posted by: CADsortaGUY
Why doesn't Reid put partisanship asside for once and do the right thing...

Why didn't Republicans put partisanship asside for once and do the right thing for 7 years?

 

[dmcowen674]

Originally posted by: Pabster

Originally posted by: CPA
approved by the Dems.

Take your pesky facts out of here.

Approved by Dems based on lies.

Thats a fact.

Republican supporters continuing spouting lies as usual.

 

[dmcowen674]

Originally posted by: FoBoT
consumer spending in Q1 2008 is going to nose dive if they don't let people get the big refunds they are expecting

economy will tank just in time for the elections in Nov.

Republicans know the people will blame the Democrats.

 

[FoBoT]

so what is the deal, does the omnibus spending bill the senate passed repeal the AMT or not?

i guess i need to go look at news.google

 

[WHAMPOM]

Now let me see? the Demos have a slight majority for a year and the Repubs had an over-riding one since the middle of Clinton's presidency. And who do we blame for the mess?
Can I make this sarcastic enough for you?isgust;

 

[CADsortaGUY]

Originally posted by: FoBoT
so what is the deal, does the omnibus spending bill the senate passed repeal the AMT or not?

i guess i need to go look at news.google

No, it doesn't fix it. It doesn't touch it.

 

[Vette73]

Dems already tried to fix it but...

"A Hoyer aide argued that Republicans had been obstructing them from passing a patch that does not add to the deficit."

Republicans are using this as a tool to try and pin it on the Dems.

 

[HombrePequeno]

Wait, wouldn't adjusting it for inflation make it revenue neutral? It would be bringing in similar amounts of inflation adjusted dollars. There's no need to raise taxes elsewhere as long as you don't raise spending by more than inflation.

 

[Darwin333]

So the bottom line is that my middle class family is going to get a big ass bill from the Feds this year?

 

[shiner]

Originally posted by: dmcowen674

Originally posted by: FoBoT
consumer spending in Q1 2008 is going to nose dive if they don't let people get the big refunds they are expecting

economy will tank just in time for the elections in Nov.

Republicans know the people will blame the Democrats.

Republicans know that when they held the majority it got fixed(patched) every year. It is just that now the Democrats are in charge and want to play politics with it.

 

[shiner]

Originally posted by: Marlin1975
Dems already tried to fix it but...

"A Hoyer aide argued that Republicans had been obstructing them from passing a patch that does not add to the deficit."

Republicans are using this as a tool to try and pin it on the Dems.

Well it DID get fixed yearly when the Republicans were in the majority.

And how does fixing it add to the deficit? That money wouldn't have been there in the first place if it were fixed. This is the same thing as the Democrats crying about a cut in Social Security/Medicare, etc.... when in fact there is an increase from what the amount earmarked for those progams was the year before....just not as large of one as they wanted.

 

[Vette73]

Originally posted by: shinerburke

Originally posted by: Marlin1975
Dems already tried to fix it but...

"A Hoyer aide argued that Republicans had been obstructing them from passing a patch that does not add to the deficit."

Republicans are using this as a tool to try and pin it on the Dems.

Well it DID get fixed yearly when the Republicans were in the majority.

And how does fixing it add to the deficit? That money wouldn't have been there in the first place if it were fixed. This is the same thing as the Democrats crying about a cut in Social Security/Medicare, etc.... when in fact there is an increase from what the amount earmarked for those progams was the year before....just not as large of one as they wanted.

Dems also tried to pass a 1 year patch like rep's did, yet it was blocked again by republicans.

 

[EagleKeeper]

I use to think that the Dems wanted to rob Peter to pay Paul.

I was wrong.

They now want to rob Paul also and give to Mary