Discussion

• jon :

  Will somebody please define the phrase, "middle class?" My rather simplistic definition would be something like, "the families living between the bottom 25% family income and the top 25% family income groups."
  That must be wrong, though, because no "middle class" families by that definition would actually be subject to the Alternative Minimum Tax.

  Just how far into the top 25% does a family need to be, before they no longer define themselves as "middle class?" Top 20%? Top 5%? Top 1%? Or, isn't "middle class" an economic definition?

  According to an Institute on Taxation and Economic Policy study published in January 2003, only 20% of families nationally had an annual income over $69,000, 5% more than %147,000, and only 1% over $304,000.

  Posted on September 18, 2007 2:08 PM

• Chris V :

  The articles on the AMT are unbelievable. We're told that the AMT was created in 1969. Then, we're led to believe that no one's bothered to think about it since. So, surprise! The middle class is now hit with this tax that was meant for the rich. And the only thing to blame is inflation and certainly not our politicians.

  It's all false bullshit. There have been dozens upon dozens of revisions in the tax code since 1969. Any one of those revisions could have addressed the AMT. However, none of them did.

  The fact is when lawmakers make decisions on the tax code, they run the numbers. One of those numbers is the intake from the AMT. So, when they're thinking of cutting taxes for the wealthy, they know they'll make up that difference in the AMT. And with more and more of the middle class getting hit with the AMT, the more the middle class pays for cutting taxes on the rich.

  The Republicans always push for a flat tax system. Well, the AMT is how they're going to accomplish that goal. They just have to wait long enough and it'll happen by itself.

  Posted on September 18, 2007 2:49 PM

• jon :

  Is it just me, or is it a little weird to be having families well into the top 20% if income complaning that taxes in the U.S. aren't progressive enough to suit even them?
  Just because, at the rate things are going, the AMT by the year 2010 will affect married people with incomes as low as $100,000?

  Families with incomes of $100,000 are at roughly the 88th percentile in the U.S.

  And the poor babies are maybe beginning to realize that one party in this country is just not doing anything to protect even those in the 88th percentile from a regressive tax system... that even THEY should be perhaps siding with the other 87% or so of us against whom the "class war" is REALLY being fought? What, and then change back? Whatever.

  Rich people's taxes are too high? In this country?

  What I want to know is, how do families with more income than 88% of the population of the United States get to define themselves as "middle" class? Because the only thing they're in the "middle" of is the top 25% of families... which kinda makes them middle upper class, if anything.

  Or is it that, even the middle upper class is finally beginning to realize that even they are helping to subsidize the relatively low tax burdens and loopholes for the TRULY rich and famous?

  As in, you know there's a problem when people in the middle of the top 25% begin thinking that the tax system isn't progressive ENOUGH? Maybe this is a good thing, but perhaps not quite rising to the level of an actual crisis.

  Call me insensitive if you like, but I just find it hard to wrap my head around how people with incomes higher than almost 90% of the country, people who pay 30% LESS as a percentage of their total income than the 40% of the population who live on less than $25,000, expect me to take seriously their whining about their tax burden being too high. Waah.

  Me, I've been voting with the "lower 88" all along, but we still have a pretty regressive system. Seems like the centuries old economic "rule of 80-20" still applies, with a vengeance.

  True that, the AMT isn't accomplishing the purpose for which is was intended: to tax obscene wealth. And it probably should be made more progressive. The thing is, so should tax rates at the bottom; after all, it's not as if families earning $100,000 are having a hard time putting food on the table.
  ALL income taxes should be indexed to inflation, except Social Security which should be collected on every penny of earned income including stock packages and golden parachutes, but a better reason for that is to eliminate the bracket creep in states that have been stuck at a BOTTOM level tax rate (the threshhold at which income BEGINS to be taxed) while the amount of income needed to support a family has continued to grow.

  Maybe we could make deasl like the rest of us could get on board with indexing the AMT when you get serious about indexing the rest of the system from the BOTTOM end up, and start doing it in all states, and eliminate the upper threshhold (currently almost that same $100,000 mark, what an odd coincidence) on which Social Security taxes are paid.

  Jump on board, people in the middle of the top 25%, and help the rest of us kick the bums out.

  Posted on September 19, 2007 7:50 AM

• Chris V :

  Jon,

  When the AMT was enacted in 1969, it was intended to address the 155 individuals with incomes over $200,000 who did not pay any federal income taxes in 1966. At that point, it did not include anyone close to the middle class.

  This year, you could fall into AMT land if your taxable income, combined with certain adjustments and tax preferences, exceeds the following limits in 2006:

  * $62,550 and you are married filing a joint return, or
  * $42,500 and you are filing as single or head of household.
  * $31,275 and you are a married taxpayer filing a separate return.

  http://www.bankrate.com/brm/itax/news/20040412a2.asp

  Those numbers are solidly in the middle-class range.

  It is a red herring to state or imply that Congress did not see this coming, as media reports suggest. Congress has revised the tax code repeatedly since 1969, CHOOSING each time to leave the AMT alone.

  Posted on September 19, 2007 4:18 PM