Today’s Tony Snow Moment
February 7, 2007 at 3:40 pm
White House press secretary Tony Snow, from today’s news briefing:
As some people in this room are suddenly finding out, the alternative minimum tax is a way of declaring working people rich and raising their taxes. I know a number of you have suggested in recent days that you’re starting to feel the bite of the AMT.
Brian said,
February 7, 2007 @ 4:09 pm
As inflation continues, the Alternative Minimum Tax will eventually become the new flat tax for those with an income.
30yearprof said,
February 7, 2007 @ 4:15 pm
As I told me US Senator (republican): if the AMT is there in 2008, you won’t be.
Actually if he limited it to Ted Kennedy, I’d reconsider.
Max B. Sawicky said,
February 7, 2007 @ 4:16 pm
What insight. That’s why the Bush Admin has proposed nothing to deal with this for six years. All of a sudden they need 20 months.
Jrod said,
February 7, 2007 @ 4:34 pm
Actually, congress has patched it each year so it hasn’t affected as many people as it would have otherwise. Each of the past 6 years it’s been pretty much a party line vote, with Republicans passing a quick fix, and most Democrats (my good Senators Feinstein and Boxer included) opposed. If Democrats wanted to flex some of their new found muscle and actually DO somtehing other than just oppose everything, they’d slay this AMT beast.
skeptic said,
February 7, 2007 @ 4:54 pm
For those people who have invested in real estate (i.e., a rental property) as one component of their retirement savings, the “AMT moment” comes as a real shock when they cash out after years of watching the value of their property appreciate. Suddenly they are “millionaires.” Fortunately the tax blow is somewhat softened by year-to-year averaging provisions in the tax code. Still, while the effect of the AMT on the rate of return can be appreciable, it can be overlooked at the outset even by knowledgeable investors.
C Smith said,
February 7, 2007 @ 4:57 pm
Don’t look to this administration for AMT reform. The revenue’s required for budget-balancing while while taking credit for making earlier cuts permanent. The most vocal new AMT payers get hit because they live in high-income, high-tax areas. Not really the GOP demographic. If they get help in the next few years, it’ll come from the Donks in Congress, not the Administration.
Taxpayers who get AMT’d because of big LTCGs aren’t going to get help, ever. Those who get hit because of high earned income and high state taxes likely will have to get used to the notion that they’re just not middle-class, compared to other Americans. The AMT victims most deserving of relief, and most likely to get it, are those with big families (lots of exemptions), claiming the standard deduction (usually indicates working close, if not paycheck-to-paycheck), and living in middle-and-lower-middle suburbs in high-tax states. Those taxpayers are really are a natural GOP constituency, if only potentially. The current administration could do something for them, AMT-wise, without utterly horrible revenue effects and while ignoring the NPR-AMT demographic (locally middle, nationally upper-middle). And they could play the leveling card against Dem Congs in the process.
But I doubt they’re that clever. Or they’ll heed the BS of those whose oxen are being gored (off to polish Bovine Scatology-oxen-Gored metaphor…)
Lee Stoller said,
February 7, 2007 @ 5:08 pm
…or…the Republicans could be hoping that there would be such an outcry for permanent elimination of the AMT that it would pass…leaving their fatcat donors free to abuse the system with all the tax shelters that caused Congress to pass the AMT in the first place.
Jeff said,
February 7, 2007 @ 5:24 pm
oh yeah, fatcat donors like Soros and the SAG …
Drone, think for yourself once in a while …
skeptic said,
February 7, 2007 @ 6:09 pm
As I recall, in the aftermath of the 2000 Presidential election, a multitude of small donations funded Bush’s legal efforts in Florida, while Gore’s efforts were funded by a few very wealthy donors. That seems to be typical. The megarich, like Soros and Martha Stewart, are often in the Democrat’s camp. Why that is I don’t understand. I presume they have tax lawyers who can isolate them from even the most draconian taxes favored by Democrats. I don’t begrudge them doing that; no one should pay more taxes than he is legally obligated to do. If I knew how, I’d do exactly the same.
C Smith said,
February 7, 2007 @ 6:11 pm
Skeptic, I’m missing something. Retirement planning, right? Trust owns RE interest, sells same. No effect on plan participant until distribution, right? So unless participant wants/needs all the cash in one year, no AMT whammy, right?
Lee, eliminating or radically pruning the AMT is a non-starter for revenue reasons. Budget-busting name-calling trumps even the most clever (feverishly imagined) Rovian scheme.
david Wilson said,
February 7, 2007 @ 6:56 pm
My dad was hit by the ATM .My mom withdrew large amounts of IRA money to pay for his alzheimer care.I’m sure there are plenty of examples.Hardly a Rovian plot.The tax clearly is unfair to many.Is it too much to ask that congress fix the tax code to make some kind of sense.
skeptic said,
February 7, 2007 @ 8:32 pm
C. Smith: I do not claim to be a tax expert, but if you are thinking about a revocable living trust, then it is my understanding the income to such a trust is recognized at the time and reported on the personal tax return of the grantor or beneficiary of the trust. So, unless an installment sale is involved (or there is a nontaxable exchange), someone is likely to take a tax hit under the current provisions of the ATM. Perhaps a reader with expertise in the area of trusts can comment on the subject.
gm said,
February 7, 2007 @ 9:24 pm
The most vocal new AMT payers get hit because they live in high-income, high-tax areas. Not really the GOP demographic.
Wait a minute! I am having trouble following this arguement. Republicans are all rich, obscenely paid CEOs. Now you are saying that there are Rich Democrats who find paying taxes painful? The room is swirling, this is just too far from the Democratic world view. Do you think when John Edwards talks about the two Americas he is talking about the Rich Democrats and the Rich Republicans
Ohil-Z said,
February 7, 2007 @ 10:46 pm
My wife and I got hit with the AMT. She’s a nurse and spent late Aug through Mardi Gras working 20 hr days in New Orleans before during and after Katrina. I’m a computer systems administrator. We live in a semi-furnished 50’s ranch and drive rusty old cars. Anyone who thinks I’m a fat cat can kiss my hairy middle aged rump.
M. Simon said,
February 8, 2007 @ 1:59 am
C-Smith,
The ox goring thing is Talmudic. You can look it up.
C Smith said,
February 8, 2007 @ 8:58 am
Skeptic, your original comment was about retirement planning. The “trust” I mention would of course be a pension trust, which of course wouldn’t be a grantor trust and wouldn’t be taxed on gain from the sale of an RE interest. And of course, the beneficiaries would control distribution timing within broad limits, so AMT/LTCG hits often could be ameliorated without need for an installment sale, etc. The more common AMT jolt in connection with RE investment, at least for the class of taxpayers we’re discussing, would be the sale of the property underlying a burnt-out shelter. Lots of people nowdays are thrilled when their old shelter properties actually sell for significant gain, only to get whacked by the AMT.
M Simon, one of the great tax conundrums is whether all tax law is inherently Talmudic, or whether it’s so because so many of the first postwar generation of tax lawyers were Jewish because more established business law specialties were closed to them because of bias.
Nancy P. said,
February 8, 2007 @ 9:29 am
Fight the fare increase! Vote for George O’Brien — get Charlie off the AMT!
Or else he’ll never return, no-oh he’ll never return and his fate will be unlearned…
he made ride forever ‘neath the streets of Boston
he’s the man who’ll never return.