Stimulus - Alternative Minimum Tax
About $70 billion or % of the so-called stimulus package
is a provision that stop about 24 million taxpayers from
being hit with the alternative minimum tax (AMT) in 2009.
The AMT was part of the Tax Reform Act of 1969
and was included to target 155 high-income households that
had been eligible for so many tax benefits that they owed
little or no income tax under the tax code of the time.
Because the AMT is not indexed to inflation an increasing
number of upper-middle-income taxpayers have been finding
themselves subject to this tax.
As a result, `patching` the AMT is a regular Congressional
ritual. Call the current AMT `patch` a tax cut or a
`stimulus` is a massive disconnect.
The IRS`s National Taxpayer
Advocate`s report highlighted the AMT as the single most
serious problem with the tax code. The advocate noted that
the AMT punishes taxpayers for having children or living
in a high-tax state and that the complexity of the AMT
leads to most taxpayers who owe AMT not realizing it
until preparing their returns or being notified by the IRS.
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