Saturday, April 21, 2012

Buffet Rule = AMT


Polls show that many folks support the Buffet Rule – a proposal to increase taxes on those earning over $1 million.  But taxpayers should approach any plan to increase taxes on the wealthy with skepticism, lest we end up with another AMT. 

In 1969, Congress created the AMT or Alternative Minimum Tax to ensure that wealthy Americans were paying their fare share – all 200 of them.  You probably think it seems ludicrous that Congress spent the time and energy passing legislation directed at so few people, and you're right, but there’s just one catch: Congress never indexed the AMT to inflation and its claws are beginning to ensnare the middle class.  Each year, Congress must act to exclude middle class taxpayers from the reach of the AMT, or millions more will pay significantly higher taxes – taxes that were directed at 200 "wealthy" folks back in 1969.

If history is any guide, we should all be wary of the Buffet Rule.

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