Because the U.S. tax code is ridiculously complex, some taxpayers have used its patchwork provisions over the years to reduce or in some cases even eliminate their federal income tax burden.
So Congress took action back in 1969 to keep a few “fat cats” from using the tax code (which Congress writes, by the way) to avoid their entire federal income tax bill. Lawmakers passed the so-called “alternative minimum tax” to prevent total tax avoidance by a handful of very rich Americans.
But there was one small problem, which eventually became a huge problem: The “AMT” was not indexed for inflation. As the income of the American people continued to grow, the income threshold at which a person had to pay the AMT did not rise proportionately. As a result, more and more Americans got caught in the AMT web and had to pay much higher taxes than they otherwise would have.
Over time, the AMT became a serious threat to middle-class Americans and not only the wealthy. To head off that large tax increase on far more Americans than originally intended, Congress began enacting a series of one-year “fixes” that kept the AMT from hitting millions more Americans who were hardly “rich.”
But now, as Congress has continued to spend far beyond what the federal government takes in through our already-too-high income taxes, Democrats in Washington have decided it is time to stop “fixing” the alternative minimum tax and to let it apply to tens of millions more Americans. They see that as an easy way to bring in billions more tax dollars.
Democrats in the Senate recently released their budget blueprint. It would drop the annual AMT fix so that starting in 2012, roughly 30 million Americans — and most certainly not only “the rich” — would be hit with an average tax increase of $3,700! The Democrats say that is necessary to pay for their proposed spending and to reduce budget deficits.
But do you really believe they would keep the deficit-reduction part of that pledge?
We know from their partisan spending on trillion-dollar-plus ObamaCare and the $862 billion “stimulus” that they are perfectly willing to spend money our nation does not have.
What evidence have they provided that they are ready to reduce spending?
Even with the failure of the stimulus to create jobs, they have flatly refused to pull back unspent stimulus funds, and they are sure to resist Republican efforts to repeal costly ObamaCare.
Sadly, we cannot accept at face value their claim that they would use more money collected from an increase in the alternative minimum tax to pay down the debt. Their track record tells us exactly the opposite. It would be extremely unwise to think they would suddenly have a change of heart if they got billions of dollars more in new taxes.
Americans who do not want to see the destructive effect on our economy of 30 million taxpayers facing an extra $3,700 in income taxes should let their members of Congress know that.
They should vote accordingly in this year’s congressional races and in the presidential and congressional elections in 2012.