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Taxpayers Anxiously Await Annual 'Patch' to Alternative Minimum Tax

Erod

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Are you ready to pay another $3,000 to $5,000 next April in taxes? That's right, the AMT patch continues to be ignored by the Democrat-controlled Congress, which could mean a big tax hike THIS YEAR for middle-class Americans.

FoxNews.com - Taxpayers Anxiously Await Annual 'Patch' to Alternative Minimum Tax

Of all the tax issues facing Congress when it returns for a lame duck session after the Nov. 2 midterm elections, the annual rite of patching the Alternative Minimum Tax will be the most urgent.

Unlike the debate over the Bush tax cuts, which will affect taxpayers' income in 2011, the AMT applies to 2010. And the delay in patching it is already causing problems and raising alarms for large numbers of middle-income taxpayers -- as many as 25 million Americans, according to one expert -- who could face a huge increase in their tax payments if Congress doesn't act.

Enacted in 1969, the Alternative Minimum Tax was originally aimed at 155 extremely wealthy taxpayers who had avoided paying federal taxes completely. It was an add-on tax designed to ensure that everyone paid some income tax every year. Since then it has evolved into the primary tax mechanism for taxing high income taxpayers.

Under the original system, taxpayers who earned more than $200,000 -- a very high income 30 years ago -- were required to calculate their taxes differently, resulting in a larger tax payment for the wealthy.

The AMT is ridiculous to begin with, but when it was originally implemented in 1969, it affected very few people. Now there are millions of people that get it between the eyes with this every year.

However, the amount has never been adjusted for inflation in its 40 years.

$200,000 a year ain't much, especially if you have kids and live in New York or California. Anywhere for that matter. It's not 1969 anymore, folks.

This is why you don't give government more power. They never give an inch back. It simple common sense that you would adjust this for inflation over the years, right? Of course not, if you're a drunken-spending government that's cornered itself by its juvenile lack of financial responsiblility.
 

Councilman

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My friend I am sorry to report that it goes so much farther in 2011.

Six Months to Go Until
The Largest Tax Hikes in History


In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:

First Wave: Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:
new taxes for 2011, a must read | Taste of Home Community
 

Deuce

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I lived in New York on 32,000. Cry me a river.
 

Erod

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I lived in New York on 32,000. Cry me a river.

So your cool with people being basically double taxed?

You think the economy is bad now? Add $4K to half of America's tax obligations, and watch it go in the crapper.
 

liblady

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So your cool with people being basically double taxed?

You think the economy is bad now? Add $4K to half of America's tax obligations, and watch it go in the crapper.

what do you believe "annual patch" means?
 

j-mac

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which you haven't had to do.....because they enacted a patch every year. why do you think this year won't be the same?

Yeah, and now they are in danger of NOT doing that. Why not throw the AMT out, it is a silly tax scheme to begin with.

j-mac
 

Erod

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which you haven't had to do.....because they enacted a patch every year. why do you think this year won't be the same?

Once upon a time, it affected almost no one. It was effectively a millionaire's tax even back then.

Now, it's an everyday additional tax to average middle class people.

It should be abolished entirely.
 
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Deuce

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Did I fall asleep during the Clinton administration and miss how his tax levels were world-crippling?
 

Deuce

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False comparison.


j-mac

The expected tax increases put us on comparable levels with what we had during the Clinton administration.
 

apdst

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Did I fall asleep during the Clinton administration and miss how his tax levels were world-crippling?

Didn't Slick Willy leave us in a recession? Or, is that recession Bush's fault, too?
 

Deuce

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Didn't Slick Willy leave us in a recession? Or, is that recession Bush's fault, too?

So a recession began with the somewhat higher Clinton-level taxes and another began with the lower Bush-level taxes. Clearly, higher taxes cause recessions!! :roll:
 

apdst

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So a recession began with the somewhat higher Clinton-level taxes and another began with the lower Bush-level taxes. Clearly, higher taxes cause recessions!! :roll:

Which is it? You know everything, so why don't you tell us what's going on?

According to you and your pards, higher taxes is going to end the recession and make life wonderful for everyone.
 
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Deuce

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Which is it? You know everything, so why don't you tell us what's going on?

According to you and your pards, higher taxes is going to end the recession and make life wonderful for everyone.

Higher taxes wont fix the recession, but they will reduce the deficit which is becoming a serious drain on our economy.

Find me one person who said higher taxes would fix the recession.
 

apdst

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Higher taxes wont fix the recession, but they will reduce the deficit which is becoming a serious drain on our economy.

Find me one person who said higher taxes would fix the recession.

You just stated that the deficit is a drain on our economy. How is that different than saying that higher taxes won't fix the economy?
 

Kandahar

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Meh, I actually agree that they should just get rid of the AMT (or at least seriously reform it) rather than doing this dance every single year where they patch it. It's nothing more than an accounting trick: as long as it technically remains on the books, that money can be used for revenue forecasts...even though everyone knows it will just be patched again the next year.

The basic concept is good: make sure that rich people are paying taxes. But I think a better approach would be to see if we REALLY need such a complex tax system in the first place. Let's analyze all of the various deductions and see if they actually accomplish anything that the government should be incentivizing at all. My hunch is that there are a few good deductions (tuition, health care expenses, charitable donations) and a lot of bad ones (mortgage interest, retirement savings). Let's just keep whichever deductions actually benefit society, scrap the rest, and get rid of the AMT. If rich people are still able to avoid paying taxes after the tax code is simplified, then they must be doing something that we want to incentivize.
 
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j-mac

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Meh, I actually agree that they should just get rid of the AMT (or at least seriously reform it) rather than doing this dance every single year where they patch it. It's nothing more than an accounting trick: as long as it technically remains on the books, that money can be used for revenue forecasts...even though everyone knows it will just be patched again the next year.

The basic concept is good: make sure that rich people are paying taxes. But I think a better approach would be to see if we REALLY need such a complex tax system in the first place. Let's analyze all of the various deductions and see if they actually accomplish anything that the government should be incentivizing at all. My hunch is that there are a few good deductions (tuition, health care expenses, charitable donations) and a lot of bad ones (mortgage interest, retirement savings). Let's just keep whichever deductions actually benefit society, scrap the rest, and get rid of the AMT. If rich people are still able to avoid paying taxes after the tax code is simplified, then they must be doing something that we want to incentivize.

For the most part I agree, but why get rid of Mortgage interest, and Retirement savings incentives?

j-mac
 

Zyphlin

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Amazing that the governments budget gets to adjust each year for inflation but somehow OUR budget doesn't.
 

Erod

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Meh, I actually agree that they should just get rid of the AMT (or at least seriously reform it) rather than doing this dance every single year where they patch it. It's nothing more than an accounting trick: as long as it technically remains on the books, that money can be used for revenue forecasts...even though everyone knows it will just be patched again the next year.

The basic concept is good: make sure that rich people are paying taxes. But I think a better approach would be to see if we REALLY need such a complex tax system in the first place. Let's analyze all of the various deductions and see if they actually accomplish anything that the government should be incentivizing at all. My hunch is that there are a few good deductions (tuition, health care expenses, charitable donations) and a lot of bad ones (mortgage interest, retirement savings). Let's just keep whichever deductions actually benefit society, scrap the rest, and get rid of the AMT. If rich people are still able to avoid paying taxes after the tax code is simplified, then they must be doing something that we want to incentivize.

An economy can't thrive when people aren't buying houses. That "interest" being paid is associated with the risk associated with buying a house, and it has a HUGE impact on the economy. Building a single house puts many other businesses (and people) to work; the trickle down effect is tenfold when you consider the suppliers and the suppliers to the suppliers, etc.

If you don't incentivize that risk, many people just choose to stand pat and live where they are, perhaps even rent as a first option. That has almost ZERO positive effect on the economy.
 

j-mac

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Amazing that the governments budget gets to adjust each year for inflation but somehow OUR budget doesn't.

Right now the current government seems to be budgeting like a newly wed couple keeping track of bills in a pizza box on top of the fridge. Nothing written down, and no real plan. Recipe for disaster.


j-mac
 
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