Democrats want tax fix on Obama stimulus bill

[Pale Blue Dot]

Source: MSNBC

WASHINGTON - Barack Obama's Democratic allies on Capitol Hill are trying to use the president-elect's economic recovery bill to extend a tax cut for middle- to upper-income taxpayers despite concerns from his transition team that it won't boost the economy.

Rep. Charles Rangel, D-N.Y., Congress' top tax writer, says both House and Senate members feel strongly about using Obama's stimulus package to make the annual fix to the alternative minimum tax to prevent more than 20 million additional tax filers from having to pay it.

Making that fix for one year alone will cost about $70 billion, a healthy chunk out of the $300 billion that Obama has set aside for tax cuts in his emerging $850 billion stimulus plan.

The AMT "patch" is usually dealt with in the fall, but doing it now makes lawmakers' jobs easier.

The AMT was designed in 1969 to make sure wealthy taxpayers pay at least some tax. But it was never indexed for inflation and therefore threatens to trap millions of people for whom it was never designed.

The Obama economic team has been resisting adding the AMT fix to the economic recovery bill, arguing privately that it won't do much to help the economy. It's virtually certain to be addressed later if left alone now — and in any event, the effects wouldn't be felt until next year's tax-filing season.

Read more: http://www.msnbc.msn.com/id/28658743 /

[WriteDown]

1. Charlie Rangel...

Working on taxes? Seriously?

[No Elephants]

2. The AMt was designed to hit the wealthy, but it now threatens to trap

millions of people for whom it was never designed. So, that means it is about to hit millions of people who are not wealthy. But the Obama team is objecting because helping those millions from a tax trap that was never intended will not help the economy that much? Didn't he run on cutting taxes for those who are not wealthy, to help THEM, even before the economy stuff hit the fan? So, how come now, helping the economy more than a little is the only standard? And what the hex is wrong with helping the economy a little? Seems as though it could use all the help it can get.

I'm confused.

[denverbill]

3. I agree with Obama on the timing. Besides, this temporary fix shit has to stop.

Index the AMT, and pay for it by increasing the AMT rate on the top few percent of people who already pay it.

But do that after the economic recovery package passes.

[Vincardog]

4. Index the AMT, and pay for it by imposing a AMT rate on Corporate income

[FarCenter]

5. The AMT disproportionately hits middle-incom taxpayers in blue states

Many of those states have higher state income tax rates and higher housing prices.

The AMT effectively phases out the deductability of state income tax payments and mortgage interest payments.