You know those tax cuts you barely saw a couple of years ago? They will soon be eaten up by the Alternative Minimum Tax. Not only that: your taxes could go much higher as this non-inflation-adjusted mechanism eats up ever more of your deductions. In 2006, 19 million people will pay it. By 2009, it will generate more revenue than the ordinary federal income tax (says TPC)! Economists here have been warning about it for years (1 and 2) but now the reality is impending for millions, according to the New York Times in this very good piece. The GOP has known about the problem for years but has done nothing about it. Nonetheless, this stealthy tax increase occurs on their watch.
Source link: http://blog.mises.org/3197/line-43-says-your-deductions-disallowed/
Line 43 Says: “Your Deductions Disallowed”
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If Congress or Pres. Bush want to work toward tax reform (as they claim to), they should repeal the AMT (alternative minimum tax).
When the AMT kicks in, many common itemized and other deductions are lost.
The much higher standard deduction from Bush’s tax cuts mean that families like mine no longer have a chance to worry about deductions. The AMT means that the other half is increasingly not able to take advantage of deductions.
Since most of these deductions are just distortions benefiting special interests, maybe there is a silver lining. It surely isn’t as good as real tax reform, but I don’t see any politicians around who care about that sort of thing.
Is the AMT a passive attempt at implementing a flat tax?
It sounds like a return to stagflation; like in the 70′s but doubly faster.
Doubly faster because not only is the AMT not inflation adjusted, but most who fall prey to it are because of escalading taxes at the state and local levels.
So escalating taxes at the state and local levels help push people into more taxes on the federal level. It’s like a rollercoaster in reverse up the Laffer-Curve to financial doom.
The reason there’s no motivation to fix it is because it’s essentially a stealth tax increase.
Congress is prevented from making law for “the People”. All law is thusly just law for government. The deductions you refer to apply to those creatures that are “Taxpayers”–a “one word” statutory descriptor creation of government which people assume to be not only the two-word “Tax Payer” but sadly….also themselves. That you are having to deal with the “….pages of gibberish” [per Paul O'Neil] is because you assume this law applies to you; certainly these thousands of pages of gibberish could have no applicability to “the people”…but only to government.
Taxman, the IRS has also failed to send me a bill detailing what they think I owe them for whatever money they think I might have made in the “taxable revenue activities” of trade in alcohol, tobacco or firearms. As per their own rules.
But that doesn’t stop them from putting me in prison and taking my property anyway.
The problem being that in order for me to succeed, I have to prove to them, in their own courts, that I am innocent to their satisfaction.
I really, really hope you are one of the few I have heard roumer of who are able to make them abide their own rules, that you have succeeded with the “dictionary defense” you mention above, and that you do party on April 15th as the rest of us cave in to “duress and threat of force”.
But until you do more than proclaim your success, I am left wondering if you are real at all.
Good thing we have those anti-tax, small government Republicans in power! (Sarcasm.)
The key to why Bush won’t fix this is found in the first sentence of the article: California, New York, and Massachusetts. Which large states aren’t going to vote Republican in the politically-forseeable future?
In the 1980s, Reagan and Rostenkowski temporarily ended the deductibility of state income taxes; this significantly increased the anti-tax constituency in high-tax (and low-tax) states. Reagan said “taxes should hurt”, to help keep a political constituency for lowering them. Making state taxes non-deductible makes them hurt more than they already do.
just goes to show me not to work over time and so take the chance of falling into the amt tax.
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