Dire new Tax news...

[moomin]

More AMT madness... this just keeps getting worse. This Forbes article is two days old.

http://www.forbes.com/business/2006/...15beltway.html

...Wait, it gets worse. You figure your regular tax, then your AMT and pay whichever is higher. Say your regular tax is $500 higher than your AMT. That means even if you don't otherwise owe AMT, you can use only $500 of what might have been a $2,500 hybrid credit. And here's the real kicker: Congress has yet to extend certain temporary AMT relief that expired at the end of 2005. If it doesn't extend that relief, then 26 million taxpayers--including almost everyone who can afford a new car--will pay AMT and there will be almost no one left who can actually benefit from a hybrid break. (The exception: Folks earning really big bucks--say $1 million or more--don't usually pay AMT. So a Hollywood star who already owns a Porsche and a Hummer, can get a credit for adding a Prius to his status stable.)...

and

...The only chance they <most of us -ed.> have to get the full hybrid credit is if Congress passes a new fix specifically allowing it...

[ghostofjk]

Welcome to PriusChat! My, you certainly jumped right in. Must be a former lurker.

Congress has been dragging its feet on the AMT matter since fall. Now, with the collective mood having shifted to "let's go through the motions, at least, of saving money where we can" (due to everyone in the House being up for re-election, and 1/3 of the Senate), who knows what they'll do?

[rdenneyutmb]

Originally posted by moomin@Mar 17 2006, 03:35 PM
More AMT madness... this just keeps getting worse.  This Forbes article is two days old.

http://www.forbes.com/business/2006/...15beltway.html

...Wait, it gets worse. You figure your regular tax, then your AMT and pay whichever is higher. Say your regular tax is $500 higher than your AMT. That means even if you don't otherwise owe AMT, you can use only $500 of what might have been a $2,500 hybrid credit. And here's the real kicker: Congress has yet to extend certain temporary AMT relief that expired at the end of 2005. If it doesn't extend that relief, then 26 million taxpayers--including almost everyone who can afford a new car--will pay AMT and there will be almost no one left who can actually benefit from a hybrid break. (The exception: Folks earning really big bucks--say $1 million or more--don't usually pay AMT. So a Hollywood star who already owns a Porsche and a Hummer, can get a credit for adding a Prius to his status stable.)...

and

...The only chance they <most of us -ed.> have to get the full hybrid credit is if Congress passes a new fix specifically allowing it...

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Oops! The anticipated credit was a factor in our decision to buy a Prius, though not the principal reason. (The car is great!) Though we have not yet been subject to the AMT, it looks like we could be with the lapse of the previous AMT relief in 2005, or at very least, have the credit severely reduced from what we anticipated.

This is disturbing information, at best. I guess we will just have to write our representatives and wait and see what happens.

[kirbinster]

The AMT is GREAT! If we leave it alone within a few years we will effectively have a flat tax with no deductions and credits. This would be much more equitable than the current system. Right now you can have two tax payers with identical incomes that pay hugely different tax bills. Why should you pay less taxes because you have a huge mortgage than someone that owns their home outright? There are many many other things wrong with the current tax laws. The best thing do to would be to trash the entire system and replace it with a simple system that is the same for everyone. Plus that would put most accountants and lawyers out of work, an added benefit!

[the fish]

OP, thanks for posting this article. I am hopeful that the Senate extension will prevail and raise the AMT exemption. Otherwise, my wallet is getting lighter after losing out on my state's tax credit.

[Tempus]

Originally posted by kirbinster@Mar 18 2006, 09:30 AM
The AMT is GREAT!  If we leave it alone within a few years we will effectively have a flat tax with no deductions and credits.   This would be much more equitable than the current system. 

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Riiiiight

You know when the AMT was put in place, there were only a handful of people making over $100K a year in the country. It's intent was to make sure they didn't get off without paying any taxes.

Of course, the first thing they did was figure out how to get around it.

Currently, do you really think the people with Million Dollar incomes think about the AMT at all? Of course not. If they were paying it, it would have been gone a long time ago. They just ignore it and their accountants wiggle around it.

The only people caught by it are the true middle class, who get absolutely screwed, and wind up paying a tax rate that is twice what anyone else in the country pays.

If you don't like the Mortgage Deduction get it removed, but don't pretend to yourself or anyone else that the AMT has anything to do with fairness.

If you want a Flat Tax get one put in, but don't pretend that the AMT will flatten anything except average people.

You're up on the soapbox ranting to the 'masses' about tax fairness, and the rich are rolling on the floor laughing at you, watching the struggling middle class spend energy calling each other names and pretending they have a moral point.

Kind of sad, really.

[Walker1]

What is AMT? Forgive me, but I am only a peasant and don't know what it means.

[moomin]

We have an personally invested, fairly large sample of tax paying voters on this board alone. It would be ideal to target a few key congressfolk and flood them with letters (as opposed to all writing our own representatives, which will reflect little more than localized interest).

Any ideas on which congresspeople have been particularly key in the last two or three tax code discussions? We could chanel letters through a particular posters mailbox if we have somebody on board in their home district.

All feelings about flat tax aside... the AMT isn't a flat tax, it's a regressive tax that primarily strikes households with less than $175,000 of income annually, stripping away the deductions that allow wealthier tax payers to avoid paying a portion of their tax burden. Flatten out the single payer AMT and broaden the corporate AMT to cover every US corporation and you have a flat tax... but nobody is proposing that.

Meanwhile, the Hybrid Vehicle Tax credit is being utterly negated. The cumulative lost benefit to the economy (within the supply-side economic model espoused by the current administration) is just under $400,000,000 on the sales of Toyota Prii alone. When all other manufacturers are factored in, we lose nearly one billion dollars in economic stimulus within the US economy, while sending close to four trillion dollars overseas to fund the manufacturing of the Hybrids that we love. Better to get the half billion dollars of stimulus than simple drive up the trade deficit because GM can't get a convincing hybrid model to the marketplace.

[MarinJohn]

AMT= Alternative Minimum Tax and was originally designed to make high income earners pay at least a MINIMUM tax, as they were making the most and paying nothing. Unfortunately, the incomes taxed were not adjusted for inflation so as incomes creepd up more and more "peasants" are now stuck paying into it. Just one more underhanded way to make more pay more tax without actually raising taxes, just like eliminating deductions thereby making more pay tax without 'raising' taxes. These days if it is underhanded and slimy it is a government sidestep of the political process which was put in place for a reason.

[kirbinster]

Originally posted by Tempus@Mar 18 2006, 11:13 AM
Riiiiight

You know when the AMT was put in place, there were only a handful of people making over $100K a year in the country. It's intent was to make sure they didn't get off without paying any taxes.

Of course, the first thing they did was figure out how to get around it.

Currently, do you really think the people with Million Dollar incomes think about the AMT at all? Of course not. If they were paying it, it would have been gone a long time ago. They just ignore it and their accountants wiggle around it.

The only people caught by it are the true middle class, who get absolutely screwed, and wind up paying a tax rate that is twice what anyone else in the country pays.

If you don't like the Mortgage Deduction get it removed, but don't pretend to yourself or anyone else that the AMT has anything to do with fairness.

If you want a Flat Tax get one put in, but don't pretend that the AMT will flatten anything except average people.

You're up on the soapbox ranting to the 'masses' about tax fairness, and the rich are rolling on the floor laughing at you, watching the struggling middle class spend energy calling each other names and pretending they have a moral point.

Kind of sad, really.

[snapback]226417[/snapback]

Nope you are wrong. AMT is around 25-28% - which makes it just about a flat tax. There should be no such thing as deductions, credits or exemptions to any tax. Those are all items that complicate the system to favor special interests. If there was a flat tax the super rich would pay more tax than you can imagine. Just think if they got not exemption or deductions and actually paid 25% of what they got as income?