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Once again, it's tax time and it's looking like I will be with hit with the dreaded AMT like millions of upper middle class Americans.
For those who are unware of what the AMT is. It's essentially a tax created by the Socialists/Democrats in 1969 to make sure the "rich" pay taxes. At that time I think there were like 150 super wealthy families who had so many deductions that they didn't owe any federal tax liability.
But the Dems never indexed the AMT for inflation and they keep on having to "patch" it every year.
It's become such a huge "easy money cash cow" for the governments, they really don't want to get rid of it. The AMT tax collection was never intended to be part of the overall government budget. Somehow in the 1980s the US government started including tax collections from the AMT into it's budget.
It's a ironic that the AMT hits the majority of taxpayers from heavily Democratic states that have high state income taxes like New York, New Jersey, Maryland, California.
So a tax created by Democrats to punish the "wealthy" really punishes predominantly upper middle class residents in heavy Democratic voting states.
It's become such a huge "easy money cash cow" for the governments, they really don't want to get rid of it.
There is your answer. They've already counted on the revenue from AMT and are not willing to give that up. It also irks me that people who live in high cost of living areas get hit with it at much higher rates than people in lower COL areas of the country. It's just another BS tax to punish the producers of society so they can turn around and redistribute it to the non-producers.
It is rather ridiculous that the AMT is not indexed for inflation. However, recall that in 1969 when it was created, no income taxes were indexed for inflation. It was just until Reagan's 1981 tax act that income tax brackets were finally adjusted each year for inflation. Indexing the AMT for inflation was a definite no-no among Congressional Democrats at the time, who argued that the purpose of the AMT was to tax the super wealthy, and there was no way significant numbers of earners would be moving into the income range that qualified for AMT to even worry about it.
Of course, it would seem they were right for the first 20 years or so. However, since 2000, Congress has to pass new legislation each year so the AMT does not hit millions of taxpayers who are not even close to being super wealthy, or even wealthy for that matter.
If your AGI approaches $75k, then you really need to consider hiring a good lawyer/accountant to form a solid tax-plan.
Otherwise; if a person refuses to follow a tax-plan then maybe they should pay more taxes.
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