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Originally Posted by Filsdepac
I thought I heard, and perhaps I'm wrong, that in addition to AMT changes, there would be an increase in taxes for individuals in higher tax brackets. Like their capital gains would be taxed as ordinary income or something. Again, I might have heard wrong, is there any 'downside' to this bill?
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Well, not sure what you heard, but off the top of my head, if the House ever passed a bill that started taxing long term capital gains as ordinary income, I think we would literally see a riot in the streets. That would be unfathomable. That could be a difference of 30-something percent difference in taxation for some people.
The bill has proposed offsets ("revenue raisers") to help fund the proposed AMt patch. This is standard on the Hill. You cant propose cutting a tax without raising a different one. Also, keep in mind that the AMT patch is only one of several things being proposed.....also included is another extension for fed R&D, taxation on stocks, and other corporate incentives.
In the case of AMT, from a policy perspective, it would make little sense to give the public a reprieve from AMT and then raise income taxes for higher income earners....since they are the ones who are paying AMT to begin with.
Thus far, some revenue raisers that have been suggested include several significant changes in the taxation of private equity investments. Foremost, the legislation would raise an estimated $25.6 billion over 10 years by requiring investment fund managers to treat income received from carried interests as compensation taxed as ordinary income and subject to payroll taxes to the extent that it does not represent a reasonable return of investment. Capital gains rates would still apply to the amount that represents a reasonable return on capital. Anyway, without boring everyone, the point I am trying to make is that revenue raisers that do not directly kill individuals will offset the AMT patch.
Fun stuff.