Comments on: The Stealth Tax

By: RicK DeMent

RicK DeMent — Wed, 31 Dec 1969 18:00:00 +0000

What the story conveniently leaves out is what the effective tax rate (tax/AGI) is for these people so affected and if that is significantly more then people who are not affected pay. Until we know that this story is kind of useless in making a determination about policy. The three thousand in extra taxes they talk about (or about 1.5% of the income group they are describing) seems like a lot but what if that 3 grand is the lionâs share of what they are paying in income tax? In other words without knowing their effective AGI we canât really make a very good determination on if the ATM is an undue burden or simply a counter to the fact there are more tax shelters at that level.

The complexity of the tax code is relevant but that, ironically, is due to the mind numbing number of deductions, allowances and credits and has nothing to do with marginal rates. To say that the ATM is the cause of the complexity is kind of silly. Hell I say let forget all itemized deductions and reduce marginal rates 5% across the board. But that proposal would not see the light of day in congress.

By: Gary and the Samoyeds

Gary and the Samoyeds — Wed, 31 Dec 1969 18:00:00 +0000

The AMT is at 28%. This puts it right in the middle of the 28% bracket for Single filers (like Me). So, if I made a little more, I would pay the same RATE, but lose deductions. Cap Gains are Dividends are normally 15%, but you get nailed on the AMT.

By: RicK DeMent

RicK DeMent — Wed, 31 Dec 1969 18:00:00 +0000

Ah I Pretty sure Capital gains never figures into the ATM. But you fail to answer the question, what is the Effective tax rate, the marginal rate is meaningless for the most part.

By: Scott Harris

Scott Harris — Wed, 31 Dec 1969 18:00:00 +0000

This is not the only hidden tax. There is an additional tax for Parents who fall into this category.

For example, last year, instead of the $1000.00 per child tax credit, I only received $483.33 per child because I made too much money. Also, my childcare expenses were only allowed a tax credit at 20% of actual expenses, not the higher amount.

The net result is last year I paid an additional $2,510.00 in taxes that would have been a full tax credit for someone making less money. For me, that was an additional 2% tax without even taking into consideration the AMT, which fortunately, I don't yet "qualify" for.

By: mrkmyr

mrkmyr — Wed, 31 Dec 1969 18:00:00 +0000

And Bush has not put in a fix for the AMT into his buget proposals. If it is not fixed and AMT continues, Bush will oversee a transfer of taxation from the very wealth to the upper middle class and and through the cutting of services an increase in taxes per services rendered for all middle and lower income Americans.

Re: not so poor Scott Harris- there are also many benefits that come along with the phase-out of certian tax credits. As income goes up, deductions from home loan interest reduces tax owed by greater amounts. As income goes up, tax-deferred savings accounts become more valuable. As income goes up, tax deductions for state tax reduce taxes by greater amounts per dollar paid in state tax. Other benefits to wealth: sales of homes with capital gains of less than $250,000 are tax free, inheritance of property allows gains from the sale of that property to be from the time of the death rather than when the property was purchased. Their are many parts of the tax code that let income come in with little or no taxation, often they do not apply to lower income persons.

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