Emanuel wants AMT reform

[cal04]

Source: UPI

U.S. Rep. Rahm Emanuel, D-Ill., called on Republicans to join Democrats in reforming the so-called Parent Penalty in the federal tax code.

Emanuel used next week's deadline for filing federal tax forms to argue for the reformation of the Alternative Minimum Tax. The AMT was designed to keep high-income earners from sidestepping taxes.

But the AMT instead is beginning to hit people with lower incomes, especially those with children. Emanuel, speaking during the Democrats' Saturday radio address, claimed "middle-class families making between $75,000 and $100,000 are now more likely to pay the tax than those making more than $1 million."

Emanuel said Democrats want to reform the tax code, an issue that has been at the top of the Bush administration agenda for several years. But Emanuel said all the Republicans have done is provide tax cuts for the wealthy.



Read more: http://www.upi.com/NewsTrack/Top_News/2007/04/14/emanuel_wants_amt_reform/

---

"Reforming the Parent Penalty is the first step in making the tax code simpler and fairer," Emanuel said. "As you file your taxes this year, let your member of Congress know that this broken system must change."

[havocmom]

1. good on him!

thanks for the post.

[rodeodance]

2. Well, Emauel----you see--tax cuts for wealthy ARE the Bush "REFORM!"

Emanuel said Democrats want to reform the tax code, an issue that has been at the top of the Bush administration agenda for several years. But Emanuel said all the Republicans have done is provide tax cuts for the wealthy.

[papau]

3. Easy to fix at "low" cost - just allowpersonal exemptions/standard deduction/and state tax deduction

to a max of $20,000.

It is the elimination of personal exemptions and the standards deduction (which should be in addition to the AMT deduction) that catches most of the lower middle class paying AMT.

Add in a deduction for state taxes up to say 20 or 25 thousand a year, and the rest of the code can stay unchanged and do its job of making sure the rich pay at least some tax.

[dysfunctional press]

10. there already is a deduction for state taxes.

nt

[Joanne98]

4. Just raise the cap and increase the tax on who's left!

And why we're at it let's pass the
'Steve Forbes Flat Tax Act". We'll raise Steve Forbe's income and capital gains taxes to 90%. A flat 90%. Just him and nobody else.

[mtnester]

5. Jeezuz - We have been a casualty of this for the past two years

this year it neearly wiped us out...I closed my eyes, wrote the checks, and then sat on the litchen floor and cried.

This CANNOT come soon enough for me.

[papau]

6. The decrease in FIT RATES has caused most new AMT returns - so you paid more 3 years ago under FIT

as a percentage of income than you do now.

So why are you sitting on the kitchen floor and crying. You maid enough to actually get a cut in taxes from the Bush tax cuts - most of us did not share all that much in those tax cuts. The only thing I can think of causing tears is that you did not have enough withheld from each check so you had to write a check - hardly a thing to cry about.

I favor the AMT cutting in at higher income amounts - and adding the FIT inflation increasing standard and personal deductions to the AMT "standard deduction" would do that.

It is curious how the right complains about the AMT, and then suggests using the AMT instead of the FIT as the tax for all of us - a variation of Forbes flat tax which because of the deductions is not such an evil result for progressives.

But I'll stay with the progressive FIT plus AMT cut in at higher incomes for now.

Just curious - your tax as a percentage of total income never gets above 28% (26% for most AMT'ers) on a marginal basis with the new AMT'ers usually having an average tax rate (total tax divided by total income) of under 20% - and only a little higher that the rate paid by non-AMT'ers at that income. Were you any different from that average result?

[mtnester]

7. Well, when we withhold at the single zero rate, plus withhold extra each pay

I THOUGHT we withheld plenty...I suppose if we withheld married two you could dump on me if you like.

And exactly what tax cut are you speaking of? The $200 check back in 2000 that WE did not get in our household? That one? You better take a look at how people end up paying AMT before you assume that only those that are wealthy and getting Bush's gift of tax cuts are the ones paying AMT. We are about as middle income, middle class as you can get.

OK, so that I can tell you I DO have some clue, my marginal tax rate is 27% and my effective rate is 22%. We do not owe a lot of money on the house, nor do we have large medical expenses. We do contribute the max to charity, and have no typical business expenses. We do not have and deductions for kids as our son is grown (and has NOT been a deduction for us for 4 years).

Proportionately relating to my income for the year 2003 (the last year we were NOT paying AMT), I am paying an effective tax rate that is 9% higher. Of course, this is all Federal income tax only, am not factoring any state, school or city income increases in any of this.

Now, can you find the tax cut I was supposed to get? I think it is hiding with the Email the WH lost. Maybe I left it outside in my Porche. :sarcasm:

[papau]

8. You came into the Bush years with a tax rate schedule that topped at 43% on a

marginal basis for some transactions.

But you seem to have 2003 data so we go with that and we find that the married filing jointly 2003 schedule for income in excess of the standard (or itemized) deductions and exemptions changes from 2003 to 2006 were a change of break points only in the world of FIT:
iN 2003:
10% to $14,000
15% from there to $56,800
25% from there to $114,850
28% from there to $174,700
33% from there to $311,950
35% above $311,950

and in 2006 that set of tax rates is unchanged with only the break points changed to $15100, 61300,,, and $336550. The additional child deductions and marriage penalty adjustment would have had a minimal if any affect on your situation.

In 2006 a standard deduction and 2 personal exemptions hides the first $16,900 from tax. So a 22% effective tax rate occurs under the FIT at $273,000 of annual income, paying $60,060 of tax, but at a 33% top FIT marginal rate. Now the Alt min has lower top level income tax rates but collects more taxes on the same income via less deductions and exemptions. A rough estimate for a $200,000 income is 26% of after reduction for THE standard amt exemption of 62550 but standard exemption is reduced by 25% of excess of income of - - meaning less 62550 with 25% 0f 50000 added back, or 150,000 times 26% or 39000 on 200,000, or an average rate of 19.5%. So we know your income is above $200,000 per year.

However, since as an actuary dealing with investments I usually do corporate tax analysis rather than personal taxes, the above may well be off a bit. Indeed I am working from memory of some business I did at the end of the Clinton term, so the factors may have changed slightly.

But the end result is that you appear to be a couple taking down over $200,000 per year and paying alt min for the last two years.

I still do not see the reason for tears

[mtnester]

9. Make your assumptions - we have, between us, NEVER knocked that

kind of money down.

Bye now.

[papau]

11. those are not assumptions - it is how the tax laws work - and over 200k is only way to

get to 22% average tax rate.

Bye now.