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Originally Posted by TripletDaddy
Or the struggling masses who are just interested in finances....
Anyone following the developments on the Hill re: the repeal of the AMT?
House Ways and Means CC Charles Rengel has introduced a major tax reform initiative that would include a modification of the current individual AMT regime (as well as a lowering of the corporate tax rate, amongst other things).
Basically, he is proposing the repeal of individual AMT for 2008 and subsequent years, with the cost offset by a surcharge on high-income taxpayers--aka, BYU grads...heh heh. The breakdown would be as follows: for married couples, this surcharge would be 4 percent of adjusted gross income (AGI) over $200,000 and 4.6 percent of AGI over $500,000. Note that the surcharge would apply to AGI, which includes capital gain and dividend income. This means that the effective capital gains rates for higher-income individuals would be 19 and 19.6 percent! Ouch.
To help offset this increase in cap gains tax, Rengel is proposing that aspects of prior law that phased out personal exemptions and reduced itemized deductions of high-income taxpayers would be reinstated.
Also, the bill would provide additional individual tax relief by permanently increasing the standard deduction and adjusting it for inflation, increasing the earned income credit tax for individuals without qualifying children, and increasing the refundable child credit.
Unfortunately, Rangel has recently acknowledged that permanent AMT repeal and significant corporate tax reforms will not be taken up this year.
Here is one thing I wish someone up on the Hill would do......eliminate the income phase out for people who are trying to deduct interest paid on student loans. I have never understood this...the government tries to incent you to get more education, then phases out your ability to deduct if you make more than about $60K a year.
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Interesting developments. It sounds like a good balance to try and offset the AMT, but, of course reasonable proposals rarely get anything done. Clearly something must eventually be done to fix AMT.
I agree with you about student loans. Although it is a problem that I wish I had...making too much money (I've got plenty of loans).