Sylvia Smith, writing for the Fort Wayne Journal Gazette, has a story on the Alternative Minimum Tax. The AMT is a secondary calculation on tax obligations, originally designed so that rich people paid at least some tax if they were too successful using exemptions and the like for tax avoidance. Unfortunately, the AMT was not indexed to inflation and now threatens middle class tax payers. In years past, Congress has passed band-aid fixes that temporarily exempt taxpayers of more modest means.
This year, Republicans are blocking Democratic efforts to save middle class taxpayers from the AMT because the Democrats’ proposals involve taxing wealthy taxpayers more heavily to avoid increasing deficit spending.
According to the Tax Policy Center, a joint program of the Urban Institute and the Brookings Institution, nearly half of all taxpayers with incomes less than $100,000 will have to pay the millionairesâ€™ tax next year unless Congress changes the law. This year, fewer than 1 percent of those taxpayers were subject to the alternative minimum tax.
The idea behind the alternative minimum tax, enacted nearly 40 years ago to prevent 155 very rich families from sheltering most of their income, was to make sure everyone paid a minimum amount.
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The House bill includes higher taxes for some well-off people to offset the cost of the patch because Democrats have insisted any new spending or tax cuts be paid for.
Bush says he will veto the House bill. Mark Souder is opposed to the bill because he would prefer to add to the deficit than tax the wealthy. Mark Souder: Champion of Red-ink Republicanism.
It’s a legitimate debate as to who should pay taxes:
Current status – Middle class taxpayers.
Democratic preference – Rich taxpayers.
Republican preference – Our kids (with interest).