You have a spouse who earns $12,000 a year in a part-time job, and two children who go to public school, which is supported by high property taxes.
Do you think of yourself as a member of the ultra-rich class of Americans, the super wealthy?
Under the existing federal tax code, you are thought to be fabulously rich. And, under a flaw in the tax code, it’s likely that you will owe the IRS a lot more money this year, as much as $2,000.
The flaw is the alternative minimum tax, known as the AMT, a special tax code established by Congress in 1969 so that people with high incomes could not use deductions and loopholes to avoid paying taxes.
Congress neglected to index the special tax code for inflation so that more and more Americans are being caught each year in an IRS net that was created to catch a handful of millionaires.
U.S. Rep. Richard E. Neal, D-Springfield, has been battling to protect middle-income families from the AMT ever since he was alerted to its flaws a decade ago by an accountant in Springfield.
Last week, the House approved a bill written by Neal that would shield 21 million households from the AMT next year, including 67,600 in Neal’s district. The bill would replace the lost revenue, in part, by ending tax breaks for private equity, hedge funds and other partnerships.
Congress has passed temporary measures in recent years to prevent the AMT from reaching larger numbers of Americans, but it has not agreed on a permanent solution, in part, because a permanent solution must be offset by some other source of revenues.
Neal deserves praise for taking steps to protect middle-income Americans, but his bill should be just the first phase of a plan to simplify the tax code for all taxpayers.
Albert Einstein once admitted that he had a tax consultant assist him with his taxes. “This is too difficult for a mathematician,” he said.
http://www.masslive.com/editorials/republican/index.ssf?/base/news-2/119528775886760.xml&coll=1
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