SCRAPPING THE ALTERNATIVE MINIMUM TAX
January 15, 2007
Enacted in 1969 to stop rich people from avoiding federal taxation, the alternative minimum tax (AMT) has morphed into a trillion-dollar economic and political monster as it ensnares millions more taxpayers, says William Neikirk in the Sun-Sentinel.
According to the Tax Policy Center, sponsored by the Urban Institute and the Brookings Institution:
- 32.4 million, or 34 percent, of taxpayers would be subject to the tax by 2010.
- By 2015, as many as 45 percent of all taxpayers could be paying the levy unless something is done.
Further, Nina Olson, the independent National Taxpayer Advocate within the Internal Revenue Service, told Congress last week that the AMT is now the most serious problem facing taxpayers. In 2010, she said, 89 percent of married couples with adjusted gross income between $75,000 and $100,000 with two or more children will owe AMT.
The result has been that some are calling for the AMT to be scrapped and other taxes to be raised to cover the lost revenue. But while Senator Charles Grassley, R-Iowa, ranking Republican on the Senate Finance committee, agrees on the scrapping, he opposes raising other taxes to recover the projected loss, saying it is "simply idiotic" to boost other taxes because of a levy that has turned out to be bad tax law.
Source: William Neikirk, "Congress under pressure to scrap the `stealth' alternative minimum tax," Sun-Sentinel, January 15, 2007.
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