Subject: ISO-AMT - Forcing people into bankruptcy and draining life long retirement savings does not serve the interests of hard working Americans & US Economy Comment: To Honorable Chairman William M. Thomas and House Ways and Means Committee - Tax Reform Hearing Dear Chairman Thomas and Committee Members I am writing to ask for your support and would appreciate your taking a moment to read this letter. As many others, I feel compelled to tell you about an issue which has and is devastating many American people. I am speaking, of course, about inequitably taxing individuals via the Alternative Minimum Tax (AMT). The AMT has become a particularly critical issue for many Americans for the past several tax seasons and looks to remain critical for many years to come. As a working professional for the past 20 years I was fortunate to work for a company that offered ISOs as additional compensation for my hard work. After acquiring much of my stock in contemplation of retirement, I held it (as Congress had intended) so as not to be penalized for selling it in the short term. I then watched helplessly as my dream of retirement vanished. My loss was not the result of the drop in stock price but the inequitable taxes I faced under the AMT. I lost about 75% of my retirement nest egg because of the unexpected $460,000 AMT bill and a $200,000 margin loan left over from meeting the tax obligation, which accumulated thousands of dollars of interest monthly. After several years of anguish and finally selling additional stocks to pay the margin loan created by the AMT, the end result was a loss of 32,000 of my 36,000 shares of stock, which I had accumulated over the past 20 years. Not only did I lose the 18,000 shares I exercised that particular year, which created the AMT, but I also lost 14,000 shares I had accumulated, owned, and had paid taxes on already for the previous 20 years. When the dust settled I was left with 4,000 shares of stock out of 36,000; I had to use the rest to pay taxes on a gain I never realized. Some type of reform and return of taxes paid on my imaginary gain are all I can hope for along with a hope that some of my remaining investments will recover, but I now realize I will never be as financially independent as I once was. The damage has been done and I will never be able to recover the investments that I liquidated to pay this tax. Please do not misunderstand me; I have no problem paying my tax obligation, but I should have paid it on my actual gain when I realized it – not on an imaginary paper gain that never materialized, thereby devastating my financial future. Because of this outdated law, I, along with many of my co-workers, friends, family, and many Americans, now find ourselves in this dreadful situation. Many American families are now on the verge of declaring bankruptcy and others are forced to sell assets (including their children’s college, savings, cars, refinancing or selling of homes, 401k/IRA pension plans liquidation etc.) to help pay the taxes on monetary gains that they never realized. Some may argue that this tax payment actually becomes a credit, yet in most instances it is a credit that the taxpayer can never recover. In essence, the taxpayer can lose all their investment money, and also other assets, simply to create a tax credit in their IRS account. This practice of requiring the payment of taxes when stock is purchased is misguided and can lead to dangerous economic consequences. Forcing people into bankruptcy and draining life long retirement savings does not serve the interests of hard working Americans. Your support is needed, now, to circumvent the damage being caused by the existing law and to help those whose financial future was ruined. We respectfully ask that you further investigate the disastrous consequences of the Alternative Minimum Tax and please support all efforts towards reform and recovery for those who have lost their hope of comfortable futures in their senior years. Respectfully, Jeff Wienrich Gilbert, Arizona 6th Congressional District |