House passes AMT fix bill

[NorthSideSox72]

The House passed a bill today to "fix" the Alternative Minimum Tax problem, saving taxpayers some $50 billion for the year. The AMT, for those unaware, was created long ago as a loophole-closer against the ultra-rich from getting out of taxes. But, as the legislation did not include any sort of inflationary adjustment, middle income families are now running afoul of it. So, each year, Congress fixes it for a year.

 

There is a further $30 billion in tax savings, including extensions of things like child tax credits, some property tax exemptions, etc.

 

Here is the part that is causing consternation. The Democrats, desiring to follow the pay-for-play guidelines, worked to find $80 billion in revenue to offset these costs. They did so, primarily, by closing what they see as a loophole - taxation of carried interest. Carried interest is currently taxed at the 15% capital gains level, even though functionally, its really income for the portfolio managers or high end proxy investors. So, they propose to put the carried interest rate into income tax, which would be 35% for most of them. This generates most of the $80 billion.

 

Dems say this is closing a loophole, where investment managers are making income but not paying income tax. Republicans say its a new tax, therefore they won't support it. The White House promises a veto.

 

Now, I don't like new taxes. But here we have a case where the majority is trying to follow the guidelines of fiscal responsibility - you know, actually paying for their spending - in order to fix something everyone knows needs fixing. And the Republicans, meanwhile, want to spend without taxing. Sound familiar? It appears to me the GOP has taken yet another step away from fiscal discipline, and towards spending money they don't have.

 

In any case, for some of us, if this little tiff doesn't get worked out, that AMT might bite us in the ass.

 

[mr_genius]

The House passed a bill today to "fix" the Alternative Minimum Tax problem, saving taxpayers some $50 billion for the year. The AMT, for those unaware, was created long ago as a loophole-closer against the ultra-rich from getting out of taxes. But, as the legislation did not include any sort of inflationary adjustment, middle income families are now running afoul of it. So, each year, Congress fixes it for a year.

 

There is a further $30 billion in tax savings, including extensions of things like child tax credits, some property tax exemptions, etc.

 

Here is the part that is causing consternation. The Democrats, desiring to follow the pay-for-play guidelines, worked to find $80 billion in revenue to offset these costs. They did so, primarily, by closing what they see as a loophole - taxation of carried interest. Carried interest is currently taxed at the 15% capital gains level, even though functionally, its really income for the portfolio managers or high end proxy investors. So, they propose to put the carried interest rate into income tax, which would be 35% for most of them. This generates most of the $80 billion.

 

Dems say this is closing a loophole, where investment managers are making income but not paying income tax. Republicans say its a new tax, therefore they won't support it. The White House promises a veto.

 

Now, I don't like new taxes. But here we have a case where the majority is trying to follow the guidelines of fiscal responsibility - you know, actually paying for their spending - in order to fix something everyone knows needs fixing. And the Republicans, meanwhile, want to spend without taxing. Sound familiar? It appears to me the GOP has taken yet another step away from fiscal discipline, and towards spending money they don't have.

 

In any case, for some of us, if this little tiff doesn't get worked out, that AMT might bite us in the ass.

 

Spending is too high, thats for sure. A 9 trillion dollar deficit is atrocious. Cut spending instead of raising taxes.

[NorthSideSox72]

By the way, if the GOP was saying they don't like the bill because they'd rather see Program X cut, then I can respect that. But they aren't. They are saying it doesn't need the offset at all. Which is ridiculous, because, removing it from the budget means less income. That means either you get new income from somewhere, or you cut a program. You can't keep this debt thing up.

 

[Balta1701]

Anywho...can someone tell me a good reason why hedge fund managers and their ilk should pay a vastly lower tax rate than the rest of us do on their income just because they're heavy investors?

 

And btw...this is exactly why the Paygo rule is a good thing. This fix needed to be done. And that loophole needed closed. So now...take your pick. Upper Middle class or super rich that are taxed at a lower rate than the lower middle class.

[NorthSideSox72]

Spending is too high, thats for sure. A 9 trillion dollar deficit is atrocious. Cut spending instead of raising taxes.

And if someone was saying that, that's a very good point to make. I personally think in this case the loophole really does need closing, but, I can see the argument you make as having a lot of merit too. What drives me nuts is people who want to spend money they don't have, which to me stands in direct opposition to fiscal discipline.

 

And I think you mean a $9T debt, not deficit. A $9T deficit and this country goes essentially bankrupt in a few years.

 

[kapkomet]

Well, I will get hit and hit bad if this doesn't pass in some shape or form. Not only AMT, but college deductions, sales tax deductions, property tax deductions are all set to expire, and I'm eligible for all those. And then most people get hit with the AMT as well? f***ing bastards.

 

News flash to assholes in Washington... $80-$120K of household imcome IS NOT RICH, you f***tards!!!!

[Balta1701]

Well, I will get hit and hit bad if this doesn't pass in some shape or form. Not only AMT, but college deductions, sales tax deductions, property tax deductions are all set to expire, and I'm eligible for all those. And then most people get hit with the AMT as well? f***ing bastards.

 

News flash to assholes in Washington... $80-$120K of household imcome IS NOT RICH, you f***tards!!!!

It was quite rich like 40 years ago when it was instituted. Which is why some sort of fix is fairly important.

[mr_genius]

And I think you mean a $9T debt

 

 

yea

[kapkomet]

It was quite rich like 40 years ago when it was instituted. Which is why some sort of fix is fairly important.

Yea, the AMT has never been indexed for inflation. They're f***ing idiots, and none of them give a s***.

[Rex Kickass]

Well, if they passed a fix, some of them do.

[Texsox]

Like the USSR we will fail not from the sword, but from the mountain of debt we demand our country takes on.

[StrangeSox]

Yea, the AMT has never been indexed for inflation. They're f***ing idiots, and none of them give a s***.

 

Who's brilliant idea was it to leave that little bit out way back in the late 60's?

[southsider2k5]

The interesting thing about the AMT vote was that it was 216-93. The thing that should jump out at you is that only 299 reps actually voted. That means 136 reps didn't feel it important enough to show up and vote, or about one third of the whole house. Its embarassing.

[StrangeSox]

The interesting thing about the AMT vote was that it was 216-93. The thing that should jump out at you is that only 299 reps actually voted. That means 136 reps didn't feel it important enough to show up and vote, or about one third of the whole house. Its embarassing.

 

 

Probably out campaigning!

[NorthSideSox72]

The interesting thing about the AMT vote was that it was 216-93. The thing that should jump out at you is that only 299 reps actually voted. That means 136 reps didn't feel it important enough to show up and vote, or about one third of the whole house. Its embarassing.

Actually, it was 216-193. Follow the link.

 

[kapkomet]

Well, if they passed a fix, some of them do.

They have never passed a real fix, they pass a law every year using stop gap measures.

[Mplssoxfan]

They have never passed a real fix, they pass a law every year using stop gap measures.

True, but this latest bill is a genuine fix. Unfortunately, it won't get past a veto, even if it's passed by the Senate.

[southsider2k5]

Actually, it was 216-193. Follow the link.

 

They misquoted the results yesterday on Bloomberg...