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September 26, 2012 at 3:58 am #605001
redblackParticipanthey, fellow west seattle political nerds.
ko00otch and i were having a – ahem – conversation in another thread about taxes and tax fairness and whatnot, and he claims that over half (i think he claimed a sizable majority) of married couples who file jointly and make over $100,000 per year are subjected to the alternative minimum tax.
i, myself, am not. neither is my wife. and neither are we jointly.
so i’d like to hear from anyone who reads the forums (and gives a rip) about whether or not you are subject to this onerous, odious tax. business owners, trust fund babies, and anyone else hit by this creeping socialist tithe should chime in and let us know about how much of your personal income it has decimated. and, of course, your visceral feelings on the matter are welcome… even encouraged.
because to hear republicans like lord willard and ko0o0tchman tell it, it will be the death of american capitalism if it isn’t repealed yesterday.
September 26, 2012 at 5:47 am #772223
transplantellaParticipantSeptember 26, 2012 at 11:07 am #772224
kootchmanMemberredblack…. I daresay you will find many, looking at the USCB income distribution map of WS. And, it cuts deeper into the flesh than 100K. It’s a “please invest somewhere else” sign on the door.
Like I said… this is how governments than can’t control spending behave. They find multiple ways to “inflate” their way out of debt. Take a good solid currency, inflate the money supply, make every dollar worth less, purchase less, and tax more. Then listen while everyone cries their income in shrinking… no kidding? The middle class is disappearing… yea.. cause remember, when inflation hits.. everything costs more.. sales taxes rise, property taxes rise, rents rise, … and the thing is…. the big target… where does all this AMT come from? The middle class. It hits so deep into the middle class, you can;t even call an “envy tax”…..it’s just a surcharge on earnings. It wastes hundreds of millions in time and income tax preparation. A complete drag on small business owners who spend more and more time screwing around with tax codes and form filing rather than managing and growing their business.
“While only 19,000 people owed the AMT in 1970, millions are paying it now.
What happened? Inflation, mostly. While the “regular” tax brackets, exemptions and standard deductions are adjusted annually for inflation, the AMT brackets and exemptions are not, so many people whose income has grown with the economy enter the dreaded AMT zone each year. Especially vulnerable are people with income over $75,000 and some large deductions, but not the exotic ones that were originally targeted by the AMT’s creators. Most vulnerable are taxpayers with several children, interest deductions from second mortgages, capital gains, high state and local taxes, and incentive stock options.”
http://www.smartmoney.com/taxes/income/the-alternative-minimum-tax-9540/
September 26, 2012 at 11:37 am #772225
redblackParticipantyeah, that was my link, koo0tch. i read it.
but it’s starting to look like reality is a little different. you and lord willard claim that nearly everyone in the middle class will get hit with the AMT, and that it should be eliminated.
i’m going to prove to you that almost no one in the middle class pays the AMT. including the self-employed and small business owners, like HMCRich.
that tax is to keep the trust fund babies from paying no taxes at all.
i’ve heard your opinion on this. now i want to hear from our neighbors, if you don’t mind.
September 26, 2012 at 11:55 am #772226
JanSParticipantredblack…do you always get up this early? lol…I have no comment here…am poor :D
September 26, 2012 at 12:00 pm #772227
redblackParticipantjan: yeah. most days i get to wake up the rooster.
good luck this week and get better soon. i’ll be thinking good thoughts about you. (that’s how atheists “pray.”)
September 26, 2012 at 12:07 pm #772228
kootchmanMemberIt cuts deeper and deeper into the middle class every year dude. It’s not a “trust fund” instrument or envy tax…. that makes liberals feel so good. Takes the meat right off the bones.
September 26, 2012 at 3:13 pm #772229
TanDLParticipantNot here… even before the recession at the height of my earning power there was no AMT, although I got close one brief year. Currently, no way.
September 26, 2012 at 3:37 pm #772230
dhgParticipantGeez, kootch, they should be easy to spot
September 26, 2012 at 6:25 pm #772231
elikapekaParticipantNot here – in fact, since I changed my business structure to corporate instead of a sole proprietor, I ended up in that 47 percent of lazy entitled bums who take no responsibility for our lives. Corporate deductions are much more generous than personal ones.
September 26, 2012 at 6:46 pm #772232
BostonmanMemberI am over $100k by myself, fortunatly my wife doesn’t work and stays home with the kids. I haven’t hit the AMT yet but maybe this year.
The only issue I have with the AMT is it isn’t adjusted for inflation like other tax rates. I do admit I had to go read the details behind the calculation since while I am an accountant by trade I am not a tax accountant.
September 26, 2012 at 7:10 pm #772233
elikapekaParticipantBostonman, I agree with adjusting the AMT for inflation. I think everything should be indexed that way, taxes, minimum wage, Social Security benefits. Makes no sense to keep these things static.
September 26, 2012 at 7:35 pm #772234
BostonmanMemberIt also appears to me that the AMT encourages investment. Since the AMT is calculated on adjusted earnings there are things you could do with disposable cash flow to bring that number down and therefore not be subject to AMT.
Investment creates jobs, the only way people invest is if they can make money or have the chance to make money. Making money can either be reducing your tax burden or making a profit.
September 26, 2012 at 9:28 pm #772235
megMemberAren’t you more likely to be hit w/AMT in states with Income Tax? All things being equal? States like: New York? Calif? NJ? Conneticut?
West Seattle’s AMT could be more a factor of “How Large are the deductions in West Seattle?” The obvious (not the only) ones are:
1. Mortgage Interest?
2. How many kids per family – child deduction?
3. Amt of Charity giving?
4. Property Taxes?
Since WA doesn’t have income tax, AMT doesn’t have as much punch here. I could be wrong, tho.
September 26, 2012 at 11:43 pm #772236
anotherwsmomParticipantThe only time it looked as though we would pay AMT, we put money into an investment (you are correct Bostonman) and avoided the whole issue.
Here is the thing: AMT isn’t a middle class tax. We make well over 100k/year and don’t pay it. The year it was an issue for us was extremely unusual. Our income into the $300k arena and even then we were able to avoid it by making a strategic investment.
What I suspect is the AMT is a penalty for being moderately wealthy. If one makes anywhere between $500k-$1million/year, it is more likely to be paid. Anything over $1million and I think you can afford creative accountants.
Maybe I’m wrong, but I believe you will be hard pressed to find anyone making less paying the AMT.
September 27, 2012 at 12:18 am #772237
skeeterParticipantHold on. There’s a problem with the original question. Individuals in Washington are far less likely to be subject to the AMT. Why? You need to understand how the AMT works.
The regular federal income tax formula allows state income tax as a deduction. For folks in California or Oregon, that is a huge deduction. AMT is, essentially, an alternative tax computation using a different set of rules. Now, the AMT calculation does *not* allow for state income taxes as a deduction.
Since Washington doesn’t have a state income tax, we don’t have a state income tax deduction in the first place. So “losing†that deduction in the AMT calculation doesn’t make a difference for us. So asking if Washingtonians pay AMT is a very different question than asking a Californian if she pays AMT.
I assure you that a LOT of middle (ish) class taxpayers in California and Oregon are subject to AMT. Why? Because they lose their state income tax deduction when computing their AMT tax liability.
Apples and oranges here folks.
September 27, 2012 at 12:21 am #772238
skeeterParticipantMeg you are headed in the right direction and are basically correct in your conclusion. To further clarify, though, AMT does allow most deductions, including the mortgage interest deduction. For most individuals, the biggest deduction that AMT doesn’t allow is the deduction for state and local income taxes.
September 27, 2012 at 12:23 am #772239
kootchmanMemberSeptember 27, 2012 at 12:28 am #772240
kootchmanMemberskeeter … income and sales taxes were both deductible.
September 27, 2012 at 12:29 am #772241
skeeterParticipantAnotherwsmom –your conclusions are incorrect. It is primarily the upper middle class who pay AMT. Particularly, the upper middle class who live in a state with state income taxes. The very wealthy generally do not pay AMT. Why? Because the marginal tax rates for the highest income individuals is significantly higher than the highest AMT rate. AMT hits taxpayers in the 90,000 to 300,000range in general. Stay below or over those amounts, and you generally won’t pay AMT.
September 27, 2012 at 12:34 am #772242
skeeterParticipantKootch – first of all you have to choose between deducting *either* sales tax or income tax, not both. Second, sales tax is much, much, less than state income tax for 99% of the population.
My original points are correct. AMT hits taxpayers in the upper middle income range who live in a state with a state income tax.
September 27, 2012 at 1:05 am #772243
john mooreMemberI’ll have to ask my wife…maybe THAT”S where our money’s going…
September 27, 2012 at 1:09 am #772244
anotherwsmomParticipantSkeeter, I think the definitions of what is middle class and what is wealthy also make a huge difference. I consider our family middle class – for Seattle (or LA, SF, NYC, and Boston). Almost anywhere else, we would be considered moderately wealthy. Less income would be going to a mortgage payment, property taxes, but more would be going to state income taxes…so there are lots of apples and oranges. The numbers will be slightly different in each state/city, but not huge fluctuations.
My family is right in the dollar range you suggest. No matter which state, we’ve never paid AMT. However, if we had gone just over the $300k range, we would have. I classify that dollar value as moderately wealthy – somewhere between upper middle class and the 1%.
September 27, 2012 at 1:22 am #772245
megMemberskeeter@17, thanks for your clarifications.
So, if you live in Oregon w/state income tax… under AMT: you can’t adjust for state income tax paid, but you CAN take child deductions, mortgage int, charitable giving, and property taxes?
You’re right, that gives an big advantage to states whose residents pay no state income tax.
September 27, 2012 at 2:36 am #772246
dyn99ParticipantI pay it. It only hits me for a couple thousand bucks per year, but it does have an impact.
I do not make over $500k/year for the record.
The reason it hits us is because of large itemized deductions. We have a very large mortgage on our house, and therefore take a significant write-off for the interest deduction. We also have spent a sizeable amount of money on renovations on our house, creating additional tax deductions for the sales tax on that cost.
We do contribute to charities also, but I would be the first one to tell you that we don’t contribute enough. Maybe once this damn house is done, we’ll give more money away.
So it does hit people under $500k.
But at the same time, I think that I pay a fair amount in taxes. I paid around 20% of our total income in federal income taxes this year, which I think is fair for my income bracket.
I do NOT think Mitt Romney pays a fair amount in taxes. Based on the fact that his income is well over $10m more than mine.
I think 30% would be fair for him.
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