Three little words: alternative minimum tax. If you haven't met it yet, you may soon. And it hurts.
In 1969, Congress designed the tax to catch zillionaires who were paying not a penny in taxes while the rest of the country dug deep to pay for the Vietnam War. Now, the tax designed to force a handful of rich guys to pitch in is chewing well into the middle class.
A quarter of American taxpayers are on their way to being hit by the AMT — households making $70,000, paying the rich man's tax. And it's a real whack. A shadow tax that makes a joke out of tax cuts for millions. And the dirty little secret is that the federal government now depends on it.
This hour On Point: tax revolt over the AMT.
Quotes from the Show:
"It's a bait and switch tax." David Cay Johnston
"It's gotten so expensive that it would be cheaper to repeal the income tax than to repeal the alternative minimum tax." David Cay Johnston
"One of the things I've noticed is that people with incomes as low as 60, 0000 dollars per year are getting hit now. ... It really and truly is a stealth tax. ... It's bad tax policy." W. Thomas Curtis
"There is a lot of shock and disbelief from people when they hear about it. ... I think people are now really getting a sense that something is going on here that they aren't aware of." W. Thomas Curtis
"There's no question the government depends on it. But I think we [ the Democrats] can make a solution that will relieve the 23 million Americans who are caught in the AMT." Congressman Richard Neal
"We have a tax system that instead of greasing the wheels of commerce, it is throwing sand in the gears." David Cay Johnston
"My favorite option to make up for the lost revenue if the AMT is repealed is to roll back the tax cuts on capital gains." Leonard Burman
David Cay Johnston, Pulitzer Prize-winning investigative reporter for the New York Times, author of "Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich — And Cheat Everybody Else";
W. Thomas Curtis, CPA at FSP and Associates in Gaithersburg, Maryland;
Congressman Richard Neal, (D-MA), Chairman of the House Ways and Means Select Revenue Subcommittee
Leonard Burman, Senior Fellow at the Urban Institute and director of the Tax Policy Center.
This program aired on March 6, 2007.