Skip to comments.The Model For Tax Reform Is Already Right There In The Code
Posted on 05/01/2012 5:28:53 PM PDT by Kaslin
The Alternative Minimum Tax demonstrates the chasm between reform and reality in Washington.
Although policymakers have talked about tax reform, almost since the last reform, they now appear to be doing so in earnest. Broadly, they desire to lower overall tax rates by eliminating tax expenditures. Yet such a simplified tax code predates 1986's reform and has been staring tax writers in the face ever since: the AMT.
Despite matching closely the qualities tax reformers profess to want, the AMT is the tax code's bete noire the true third rail of American public policy. While President Obama's deficit reduction commission included even Social Security in its recommendations, no one dares mention that the AMT's reach not be shortened or "patched" as has happened every year since 2001.
Originally justified as limiting higher income individuals' reduction of their taxes through the regular system, the AMT operates as a parallel and Spartan tax system. Minus many of the regular system's tax-reducing provisions, AMT taxpayers recalculate a second time, additionally paying the amount by which the AMT exceeds their regular total.
Originally comprehensively first enacted in 1982, the AMT survived 1986's tax reform and has been a blight ever since. Lately it has begun to bite with a vengeance, now threatening middle-class taxpayers for two reasons.
First, as Congress' Joint Committee on Taxation explained last year:
"Personal exemptions, the standard deduction, and certain itemized deductions, such as state and local taxes and miscellaneous deduction items, are not allowed to reduce alternative minimum tax."
(Excerpt) Read more at news.investors.com ...
“...the AMT is the tax code’s bete noire...”
What sucks about the AMT is that you have to calculate your tax twice. After jumping through all of the inducements, discouragements, and complexity or the regular tax code, you then have to calculate the AMT and pick the higher. You can’t just say... hell, the AMT is simpler, I’ll take that... because you don’t know which calculation is worse for you.
Apparently the author of this piece hasn’t yet heard that all assets are now the property of The State.
Premier Hussein MAY allow you to keep a little, provided you toe the line like a good little prole.