The sticky-smiled politicians have another card up their sleves. You know all those tax cuts way back when in 2001? I suppose it was a great election bargaining chip at some point, but tax payers are starting to notice something called The Alternative Minimum Tax.
The Alternative Minimum Tax is an alternative to the income tax…and it is to ensure that every single tax payer pays something. No one who gets an ecnonoic benefit gets to skip out, not the super-rich, not the burger flippers.
Every tax payer is obligated by law to compute their income tax liability and their alternative tax liability and pay the greater of the two. Just see line 48 on the 1040 form! The AMT is covering more and more people because it is not indexed for inflation, and people are paying less and less in income tax because of tax cuts. The AMT was designed to account for the super-rich, but more and more people who aren't super-rich are paying this. By 2010, about 30 million tax payers will be paying this. Most married couples who make over 100k will pay this today.
You know, every single congressman who voted for the tax cuts knew about the AMT. The government has to be funded somehow, right? It would be nice if our elected representatives were a little more forthright about what they are actually doing! Then again, what kind of politician is upfront? None that I know of!
For more information on the Alternative Minimum Tax, click here.
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According to Professor Camp, the federal fisk relies on the AMT for 27% of its budget. Gee, I wonder why they are so reluctant to change it! And it still didn't reslove to problem of the super-rich not paying taxes. We need to go back to the consumption tax system!! Or at the very least, index the AMT for inflation. Politicians are SO slimy - making Americans think they are cutting taxes when in reality they have the AMT up their sleeves!
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