It's tax week and get ready for a week's worth of tax stories that only tell you part of the story. To recognize the media's shortcomings, this week we will focus on a number of issues, starting with the Alternative Minimum Tax, or AMT.
The AMT was devised as a way to make sure everyone pays some taxes. Over the years it hasn't been indexed leading to a number of middle class taxpayers falling into the AMT.
While there are a number a problems with the AMT, such as the way options are treated, many of the tax payers who fall under the AMT are not exactly being overtaxed.
In the April issue of SmartMoney (a Wall Street Journal publication) several families taxes are reviewed, such as the family from Missouri who under the AMT will pay 15.7% of their 182,300 adjusted gross income to the feds. Another family makes $90,000 finds themselves paying 9.2%. How are these people paying these amounts? Numerous exemptions bring their level well below the 21.4% paid by the top 10% of Americans (those making over $92,000 in 2001). See the Tax Foundation for breakdown of taxes paid.
For those opposed to flat tax, maybe it's time to reconsider, especially considering the way everyone seems to have gamed the tax system to pay as little as possible and forcing the deficit and national debt to huge levels and forcing future generations to pay our bills. It may be our money, but it's also OUR debts.
