Subject: 2006 Alternative Minimum Income Tax Comment: re: ALTERNATIVE MINIMUM INCOME TAX To the best of my knowledge, Congress has done nothing to prevent millions of taxpayers like my spouse and myself from being forced to pay alternative minimum income tax next year (2006) because of inaction on the part of Congress including both the House and the Senate. We pay high property and New York State Income Taxes. We have no mortgage interest deduction. We itemize on our Federal tax return and the combination of real estate property taxes on the house we have lived in for the past 33 years plus the state income tax paid account for 95% or more our itemized deductions. With the exemption amount at $58,000 for the year 2004 we did not owe AMT and I expect 2005 will be the same. The year 2006 presents a much different story. The law on the books now for years beginning January 1, 2006 states that the AMT exemption amount will revert to $45,000 for married couples in 2006 unless and until Congress changes it. What does that mean? That means that we will owe AMT for the year 2006 and will be required to pay estimated income taxes on a quarterly basis. We will not be alone. There will be millions of others like ourselves in the same boat. What is the significance of all of this? It means our marginal tax rate is no longer 25% --- not even the 26% rate that is used to compute AMT. It will be higher than that. So the so-called “tax cuts” that were passed now will only benefit the “rich” since their marginal brackets would be higher, starting with the 28% bracket which gradually will balance out their having to compute AMT at 26%. It’s only for those in the lower marginal brackets that a problem is presented --- middle income families. The AMT should be eliminated once and for all. It does not achieve the purpose for which it was intended. It was not meant to hit the middle class. It will hit millions of taxpayers earning less than $100,000 per year. If regular tax law uses brackets of 10, 15 and 25%, inflation sooner or later will erode the value of the AMT exemption amount (which is not adjusted for inflation) and which is being decreased by $13,000 for the year 2006. When will you do something to correct this wrong? I might also add that laws that penalize taxpayers by having them pay higher and higher percentages of their total incomes to federal, state and local governments in the form of income, property, sales and other taxes, can only serve to motivate those individuals to leave their state of residence where they are penalized and move to a state where they are not penalized. This is changing "economic behavior" and pitting the residents of one state against the residents of another. Why should New Yorkers and those who happen to have been born in and stayed in a high tax state foot the bill for the rest of the states who tax their residents less? Where do the tax dollars that New Yorkers send to Washington go? Do they go to other states that don't tax their residents to the proportion that New Yorkers are taxed? Do the residents of those states get the benefits and New Yorkers pay the bill? I would like you to answer that question? Why is Congress allowed to put a higher tax burden on those already paying a larger portion of their incomes to the state governments in the states in which they live. To me it seems like taxation without representation. In addition to those couples who itemize deductions, some of those couples who take the standard deduction will be affected also, but to a lesser extent. This whole business of the Alternative Minimum Tax presents a large problem and is about to hit the middle class and most of the middle class is not even aware of it. Why do I not hear or read about any senators or members of the House Representatives discussing this? January 1, 2006 is merely 3 months and a few days away. The clock is ticking! It is time to permanently eliminate the Alternative Minimum Tax. |