A Stitch in Haste

If you can find five pages worth of free time, then be sure to review the latest brief, courtesy of the Congressional Research Service, on the increasing prevalence of liability under the Alternative Minimum Tax.

Here are some highlights:

--The number of taxpayers subject to the AMT will mushroom from about 3 million in 2004 to an estimated 21 million in 2006. That's a sevenfold increase in just two years!

--In 2006 more than one-third of taxpayers making between $50,000 and $100,000 will be subject to the AMT.

--Unlike the standard exemption for the regular federal income tax, which is indexed to inflation, the standard exemption for the AMT is scheduled to decrease in 2006:

For 2005, the AMT exemption is $58,000 for joint returns and $40,250 for unmarried taxpayers. In 2006, the basic AMT exemption is scheduled to decrease to its prior law levels of $45,000 for joint returns and $35,750 for unmarried taxpayers.

--As a point of reference, in 2006 a family of four will be subject to the AMT with just $67,500 of income. That's right, if you make $67,500 per year, then you're "rich." Congratulations!

--By 2010, more than 95% of taxpayers with adjusted gross incomes between $100,000 and $200,000 will be subject to the AMT (a program originally designed to tax a mere 155 hyper-rich individuals).

--The AMT will increasingly have little or no impact on the truly "rich" since they are already penalized under the traditional federal income tax, through progressive reductions in both deductions and the standard exemption. It will increasingly become a strictly middle-class phenomenon.


Click to enlarge.

We have seen the capacity of this Congress to do nothing in the face of fiscal disaster more than once. The Pension Benefit Guaranty Corporation crisis comes to mind, as of course does Social Security.

Explain to me again why legislators are somehow "better" or "more connected to the people" than judges are?