This was the Letter to the editor I sent to my local paper. I should have done it a week ago when the deadlock became evident.
The Alternative Minimum Tax (AMT) was enacted in 1969 to catch the many wealthy Americans who were not paying any tax due to tax breaks. Today the AMT no longer forces the wealthy to pay their share, but is set to hit millions of middle class families when they prepare their 2007 tax return. AMT was never indexed for inflation but deductions and exemptions have continued to increase. The result is today a family will pay less in tax than they did 10 years ago on the same amount of income. At the same time, they are more likely to trigger AMT. A family with 4 children making $70,000 will have tax on their 2007 tax return of $5056. But the AMT on the same amount of income is $6500. They will pay $1444 more in taxes for 2007. A nasty surprise over 2006.
The cause of the surprise is Congress. For the last few years, Congress has been passing patches to AMT instead of fixing the problem. The last AMT patch expired on
December 31, 2006.
All year Congress has assured us that they plan to extend the patch for 2007. However, with just days to go before they adjourn for Christmas, they still have not gotten an AMT bill passed. If there is no patch, 20 million more taxpayers will be hit with AMT over 2006. The increase is estimated to average $2000 per return. This will hit married couples with children hardest. It does not take much income to trigger AMT. A couple with 4 children with as little as $57,000 will pay about $14 in additional tax. It goes up from there.
Please contact your Representatives, Senators and the White House and demand that they stop playing politics and pass an AMT patch. There are bills dealing with AMT in Congress now but they need a compromise and members of both parties putting down the rhetoric and thinking of the people who elected them first.
I had heard the numbers from the IRS Oversight Report but until I played with them on my tax software, I didn't realize how little income it would take. A family with 3 kids-$62,000, 2 children - $71,000, 1 child - $71,000 and no kids - $77,000. AMT doesn't give any breaks to seniors or the blind. And all these figures were using the standard deduction. A taxpayer who itemizes deductions could have a higher chance to trigger AMT.
The AMT patch should have been done months ago. Now, politics and election rhetoric has taken over and may cause millions of average Americans money they worked hard to earn.
Now is the time to contact your elected officials and get them working.