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Posted by on Nov 11, 2006 in At TMV | 15 comments

Fixing It

The Democrats plan on doing something about the AMT:

Democratic leaders this week vowed to make the alternative minimum tax a centerpiece of next year’s budget debate, saying the levy threatens to unfairly increase tax bills for millions of middle-class families by the end of the decade.

The complex and expensive tax was designed to prevent the super-rich from using deductions, credits and other shelters to avoid paying the Internal Revenue Service. But because of rising incomes, the tax is expected to expand to more than 30 million taxpayers in 2010 from 3.8 million mostly well-off households in 2006.
[…]
Rep. Charles B. Rangel (D-N.Y.), the presumptive chairman of the tax-writing House Ways and Means Committee, this week put fixing the AMT at the top of his agenda, calling it far more urgent than dealing with President Bush’s request to extend the 2001 and 2003 tax cuts, which are scheduled to expire in 2010.

More:

The focus on the AMT is hardly surprising, given that victims of the tax have been concentrated in high-cost urban areas such as Washington, New York and San Francisco — places that tend to vote Democratic. Rangel, Hoyer and Nancy Pelosi (D-Calif.), the presumptive House speaker, all represent states hit hard by the AMT, which is sometimes called the “blue-state tax.” To map states with the highest concentrations of AMT taxpayers is to draw bull’s-eyes over California and the Northeastern seaboard.

Locally, an estimated 240,000 families and individuals in the District, Maryland and Virginia will have to pay the AMT at tax time in April, according to projections by the nonprofit Citizens for Tax Justice. That is an increase of nearly 100,000 local families since 2003.

These taxpayers would owe the IRS $6,813 in additional taxes on average, according to an analysis by the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution.

Any thoughts from our American readers on this? I must admit that – being Dutch and all – I am not very educated in the kind of taxes you all have, the impact they have, etc.

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