CraigSca
01-24-2007, 06:50 AM
Hey guys and gals! Just wanted to let everyone know that my family did well enough (yes, we've recovered from my 6-month layoff a couple years ago) to become members of the alternative minimum tax club! Hurray!
While I think it's a grand idea to make sure that the rich get taxed and can't rely on mountains and mountains of obscure deductions to get around paying taxes, I'm not so sure that legislation passed in 1969 that determines I'm "rich" makes sense. There are so many problems with this tax, it's ridiculous:
1) There are no adjustments for inflation (gee, it's only been 38 years), so every year more and more families will be paying this flat tax. It's estimated that by 2010, nearly every married couple earning $100,000 will be paying this tax.
2) It's a cash-cow for the government. They're already spending the money, so repealing it or changing it in any substantial way will massively affect the national debt.
3) There's a flat standard deduction, but there are NO ITEMIZED deductions. I thought the whole point behind itemized deductions was to provide incentive for Americans to a) buy a house (and help offset the costs of home ownership) because you can deduct the mortgage interest b) give to charity/church, c) help offset the costs of education by deduction a portion of tuition, etc., etc. You basically pay a flat tax against your gross income minus the standard deduction.
How does it work? You do your taxes normally, with all your deductions (for me, it's mortgage interest, real estate and state taxes, and charitable contributions - standard stuff, I don't have a tax shelter in the Canary Islands or anything). Then you do it the alternate minimum tax way. Whichever is more is the tax you pay. Therefore, any tax breaks that have been announced, etc., reduce my "normal" taxes, but don't apply because my AMT will now be more. How cool is that - you can announce tax breaks, and all it will do is make MORE people pay the AMT!
Why am I angry? I pay more during the year so I can get a check from the government around tax time - usually it's about $3K. This year, surprise, surprise, I owe about that amount (my estimate).
I'm sure I'll get a lot of "waaah! waaah"" from others and I fully understand. The issue is, this will increasingly affect the middle class and whack them upside the head because inflation is NOT TAKEN into ACCOUNT (what kind of boneheads made this tax?!). Tax breaks for the middle class do nothing when all it does is increase the chance people will be paying the AMT.
While I think it's a grand idea to make sure that the rich get taxed and can't rely on mountains and mountains of obscure deductions to get around paying taxes, I'm not so sure that legislation passed in 1969 that determines I'm "rich" makes sense. There are so many problems with this tax, it's ridiculous:
1) There are no adjustments for inflation (gee, it's only been 38 years), so every year more and more families will be paying this flat tax. It's estimated that by 2010, nearly every married couple earning $100,000 will be paying this tax.
2) It's a cash-cow for the government. They're already spending the money, so repealing it or changing it in any substantial way will massively affect the national debt.
3) There's a flat standard deduction, but there are NO ITEMIZED deductions. I thought the whole point behind itemized deductions was to provide incentive for Americans to a) buy a house (and help offset the costs of home ownership) because you can deduct the mortgage interest b) give to charity/church, c) help offset the costs of education by deduction a portion of tuition, etc., etc. You basically pay a flat tax against your gross income minus the standard deduction.
How does it work? You do your taxes normally, with all your deductions (for me, it's mortgage interest, real estate and state taxes, and charitable contributions - standard stuff, I don't have a tax shelter in the Canary Islands or anything). Then you do it the alternate minimum tax way. Whichever is more is the tax you pay. Therefore, any tax breaks that have been announced, etc., reduce my "normal" taxes, but don't apply because my AMT will now be more. How cool is that - you can announce tax breaks, and all it will do is make MORE people pay the AMT!
Why am I angry? I pay more during the year so I can get a check from the government around tax time - usually it's about $3K. This year, surprise, surprise, I owe about that amount (my estimate).
I'm sure I'll get a lot of "waaah! waaah"" from others and I fully understand. The issue is, this will increasingly affect the middle class and whack them upside the head because inflation is NOT TAKEN into ACCOUNT (what kind of boneheads made this tax?!). Tax breaks for the middle class do nothing when all it does is increase the chance people will be paying the AMT.