...taxes on middle class doubling?......

[seanx]

...I'm trying to gather info on this, but it appears to be a tax that was being paid for by the super rich and now it is about to expire and balloon onto the middle class in 2008....CNN just stated that 24 million middle class families will have their taxes double next year. Thoughts?

It's called the alternative minimum tax or AMT. Here's what I've found:

news.yahoo.com/s/ap/20071109/ap_on_go_co/congress_taxes

House passes $80 billion tax relief bill

By JIM ABRAMS, Associated Press Writer
34 minutes ago



WASHINGTON - House Democrats on Friday pushed through an $80 billion bill to block the spread of a dreaded tax on middle-income people. The White House and Republicans, protesting tax increases in the bill affecting mainly investment fund managers, maintained that it would never become law.

The 216-193 vote to "patch" the alternative minimum tax for a year sends the issue to the Senate, where its prospects are at best uncertain. Not one House Republican voted for it.

What is certain is that if Congress and the White House do not reach a compromise by the end of the year, anywhere from 21 million to 25 million middle-income taxpayers will be hit by the AMT, costing them as much as $2,000 in extra taxes.

The AMT was created in 1969 to ensure that a very small number of wealthy people could not use tax breaks or deductions to avoid paying any taxes. But it was never indexed for inflation, and every year the AMT draws in more middle-income taxpayers. This year some 4 million people were subject to the tax.

Congress has recently responded with annual fixes or patches to limit those affected by the tax while searching for a way to eliminate it. House Ways and Means Committee Chairman Charles Rangel, D-N.Y., last month outlined a plan to repeal the AMT, at a cost of $831 billion over 10 years, but acknowledged that action on his proposal is a long way off.

Friday's bill would extend AMT relief for one year, at a cost of about $51 billion. It includes another $30 billion in largely popular tax relief measures, including expanding the child tax credit, providing a property tax deduction to some 30 million families and extending a tax exemption for the combat pay of military personnel.

It extends several dozen targeted tax breaks due to expire at the end of the year, including a deduction for college tuition, a deduction for teachers' out-of-pocket expenses and deductions for residents of states that do not have income taxes. Others benefit winemakers, employers of Katrina victims, contributors to charities and state lawmakers.

The controversies come over some $80 billion in new tax revenues required under House Democratic rules that tax cuts or spending increases be offset so that the federal deficit does not grow.

The bill, said House Speaker Nancy Pelosi, will enable Congress "to plant a flag for fiscal responsibility."

But anti-tax Republicans said the AMT was a mistake and thus offsets were unneeded. "What absolute lunacy," said Rep. David Dreier, R-Calif., "paying for a tax that was never intended."

The bill would bring in $25 billion over 10 years by taxing so-called "carried interest" as ordinary income. Critics say that it is unfair that private equity managers pay the 15 percent capital gains rate on profits from fees or services instead of the ordinary income tax rate of 35 percent for high earners.

Democrats argued that 23 million people in danger of getting hit by the AMT would be protected by tax changes affecting some 50,000 people earning carried interest.

But changing this tax rule, as well as others affecting corporate transactions, "would undermine the competitiveness of U.S. businesses in the global economy and could have adverse effects on the U.S. economy," the White House said in a statement warning of a presidential veto if the House bill clears Congress.

Some pro-business Democrats joined Republicans in expressing concern that the carried interest provision could hurt venture capital and real estate investors as well as hedge fund managers making hundreds of millions of dollars.

Senate Finance Committee Chairman Max Baucus, D-Mont., plans to put together what he says will be a fiscally responsible Senate version of the AMT after the House vote, but has not committed to any specific tax raisers. Under Senate filibuster rules, Republicans have the votes to kill any bill with tax increases.

"Congress can and must stop this middle class tax hike before Thanksgiving — without raising taxes," Senate Republican leader Mitch McConnell of Kentucky said Friday.

But Pelosi said that "we have an understanding with the Senate that this legislation, in order to go forward, must be paid for."

"Raising revenues takes political courage," said House Majority Leader Steny Hoyer, D-Md. "There is no courage whatsoever in plunging our country into debt, spending and not paying."

The Internal Revenue Service has warned that delays in passing an AMT fix bill, because of House-Senate differences or a presidential veto, could have immediate repercussions for next year's tax-filing season. The IRS says it is now preparing forms for next year and ambiguity about the fate of the AMT could delay processing of returns for as many as 50 million taxpayers and delay issuing of about $75 billion in refunds.

The White House also said language in the bill to terminate an IRS program farming out delinquency cases to private debt collectors would subject it to a veto.

___

The bill is H.R. 3996

[seanx]

...nobody has yet to respond to my question earlier on this.....and since I've seen a second article which says that the highest someone would pay is $2000 extra a year, but I'm not sure......

Here's some new info on the subject: (what the f*ck is going on here? Am I insane or are the forces that be looking for problems?.....I predict more people are going to be going off when you add this to the mortgage crisis and job losses and illegal immigrant problems......). Thoughts?

news.yahoo.com/s/ap/20071201/ap_on_go_ot/tax_hit

32 million tax refunds could be delayed By JIM ABRAMS, Associated Press Writer
Sat Dec 1, 2:01 PM ET



WASHINGTON - Silena Davis had counted on an early tax refund to pay for getting her teeth fixed. Now, because Congress has dawdled all year on a tax bill, she and millions of other early filers could have to wait extra weeks for refunds that last year averaged $2,291.

The Internal Revenue Service is looking hard at delaying the start of its filing season, set to kick off on Jan. 14, if Congress fails to pass legislation in the next two weeks. At issue is how to handle what could be a dramatic increase in the number of people facing a higher alternative minimum tax.

If there is a delay and it extends into mid-February, it would slow nearly 32 million refunds worth a total of about $87 billion, the IRS Oversight Board predicts.

"It would definitely make a big difference with me," said Davis, a George Washington University Law School administrator. "I'm going to have to get a crown and it's going to be really expensive."

The board, an independent advisory group, said in a report to lawmakers last week that it is "gravely concerned about the serious risks" to the filing season if Congress does not make timely changes to the tax. They include more mistakes by both taxpayers and the IRS and more people failing to pay taxes because of uncertainty about what they owe.

The alternative minimum tax was passed in 1969 and was aimed at about 155 very wealthy families who used deductions to avoid paying any federal income tax. The AMT disallows certain deductions and credits. It was not adjusted for inflation; as a result, over the years it has hit a growing number of middle-income taxpayers.

More than 4 million were subject to it in the 2006 tax year, and that could soar to 25 million this year without congressional action.

Congress in recent years has approved one-year fixes to stop the tax from expanding. Legislation this year has stalled in a dispute between majority Democrats and the White House. The stumbling block is whether some taxes should rise to offset the cost of correcting the AMT.

Richard Spires, the deputy IRS commissioner for operations support, said in an interview that the agency is considering not processing all early returns if the AMT issue is not resolved soon.

"We are worried that if we allow certain filers to file that it does not cause a lot of confusion and delay the whole filing system for everyone," he said.

While most people are not hit by the tax, the IRS lacks a way to distinguish what returns are affected by possible changes in tax law.

The AMT, he said, involves "some of the most complex code that we deal with, right at the heart of our tax compilations."

People who file returns under the current AMT law would have to file an amended return if the law were changed. Spires also stressed that there would not be any advantage to filing by paper if the IRS is not accepting electronic returns. "We're not going to process paper returns any faster," he said.

The dispute would give the millions of people who wait until the last minute to file their returns yet one more reason to procrastinate. "If it was only two or three weeks, it wouldn't bother me at all," said Toni Mistretta, a health care worker from Jamesport, N.Y.

Some disruption already is taking place. As Congress was leaving for its Thanksgiving break with no deal in sight, the IRS was going to press with the forms for the 2007 tax year.

Spires said the agency has postponed printing the AMT form and 11 others affecting smaller tax issues that Congress has promised to deal with but has not.

The IRS has done the design work on the new forms after receiving assurances from Democratic and Republican leaders on the taxwriting committees that Congress will enact an AMT fix this year similar to legislation passed last year.

Congress returns this week. But it will take about seven weeks after a bill is passed and signed into law to do the necessary programming and testing before those forms could be presented to the public, Spires said.

H&R Block said 60 percent of its clients who claim credits using forms affected by pending legislation normally file by the end of February. A delayed refund could cause hardship for those people in paying holiday bills or addressing other immediate financial problems, according to the company.

Aides on the taxwriting committees said they were unaware, at this point, of any suggestions to extend the April 15 filing deadline if the filing season is contracted because of the AMT dilemma.

The IRS oversight board, using past agency data, said that if the start of the filing season is pushed back two weeks to Jan. 28, it would delay some 5.6 million refunds totaling $17 billion. A Feb. 18 starting date would delay 32 million refunds totaling $87 billion.

The report came after weeks of warnings — from President Bush, Treasury Secretary Henry Paulson and the IRS — about the consequences of failing to enact a temporary fix. Paulson said the 25 million returns that could be affected in 2007 would pay on average an additional $2,000 in federal income tax.

"This is a huge tax increase that taxpayers do not deserve and Congress must stop," Bush said Saturday in his radio address, his latest comments on the issue.

That will not be easy.

On Nov. 9, House Democrats pushed through a one-year "patch" to shield 21 million taxpayers from about $50 billion in higher taxes due to the AMT. The bill included an additional $30 billion in tax relief measures such as expanding the child tax credit and extending numerous about-to-expire tax breaks for education costs, small business and military personnel.

But, honoring their pledge not to pass legislation that adds to the federal deficit, Democrats voted to increase taxes by $80 billion in other areas, including for investment fund managers. Tax-adverse Republicans voted unanimously against the bill and Bush said he would veto any bill that included a tax increase.

In the Senate, Finance Committee Chairman Max Baucus, D-Mont., has floated a proposal to find ways to pay for the tax credits, but not the AMT fix. There was no deal with Senate Republicans before the Thanksgiving break, and it was unclear whether House Democrats — or the president — would accept Baucus' approach.

Congress' Joint Committee on Taxation estimates that, without a fix, about half of taxpayers with adjusted gross incomes in the $75,000-$100,000 range will be affected by the AMT this year.

___

Associated Press writer Natasha Metzler contributed to this report.

[seanx]

updated info on the subject:

news.yahoo.com/s/ap/20071219/ap_on_go_co/congress_taxes

House to vote on preventing expanded tax By JIM ABRAMS, Associated Press Writer
37 minutes ago

WASHINGTON - After agonizing for weeks, the House planned to vote Wednesday on legislation that would protect more than 20 million people from seeing their tax bill balloon this year as a result of the dreaded alternative minimum tax.

One of Congress' last acts before it closes shop for the year, passage of the bill providing a one-year stay on growth of the AMT was a political must: Neither party wanted to leave Washington taking blame for a tax increase, averaging $2,000 a person, that would affect millions. House passage would send the bill to President Bush.

The last-minute nature of the vote on the AMT fix resulted from a fundamental difference between the House and Senate. House Democrats had insisted that the $50 billion in tax relief resulting from the one-year fix must be paid for by an equivalent amount of revenue elsewhere, mainly by closing a loophole on offshore tax havens.

Senate Republicans, however, have blocked the Senate from taking up legislation that includes a tax increase, and Bush threatened to veto any bill that raised taxes.

On Tuesday night the Senate for a second time rejected the House-backed approach of a paid-for AMT bill. The House Democratic leadership, which was committed to paying for the tax relief, had asked the Senate to make one last stab at the issue. The Senate vote was 48-46 for the House bill, 12 short of the 60 needed to approve it.

With that vote, the House had no choice but to take up the Senate bill, which shields some 21 million taxpayers without a means to cover the cost to the Treasury.

"Let me be clear, there is no disagreement between Republicans and Democrats over protecting the middle class from the AMT," House Majority Leader Steny Hoyer, D-Md., said. "The question is, will we do so responsibly or charge tens of billions of dollars to our grandchildren?"

The AMT was created in 1969 to make sure that a small group of very rich people did not totally avoid paying taxes. But the tax, which applies more stringent rules for using deductions in calculating tax obligations, was never adjusted for inflation, and every year more middle- and upper-middle-level income people are hit by the tax.

Congress has responded by passing annual fixes, or patches, to keep the AMT from affecting more people. Without a fix, taxpayers subject to the tax could grow from 4 million in 2006 to 25 million this year.

Even with House passage of an unpaid-for bill, the consequences of the congressional dispute could be felt by millions.

The Internal Revenue Service has said that it will take seven weeks from the time the bill is signed into law to reprogram and test forms, going well past the planned mid-January start of the 2008 filing season.

The IRS said Tuesday that it has yet to decide whether certain delays in processing returns and sending out refunds will affect AMT taxpayers or all taxpayers.

The Democratic majority in the House needed the support of Republicans, who in the past have voted unanimously against raising taxes to pay for the AMT. Many Democrats, led by the fiscally conservative "Blue Dogs," said the House should not bend on its "pay-as-you-go" principle that requires all tax cuts or mandatory spending increases be offset by the same amount of tax increases or spending cuts to keep the federal deficit from rising.

The overwhelming majority of the 47-member Blue Dogs would vote against any bill that is not paid for, said Rep. Mike Ross, D-Ark., a leader of the group. "For the life of me, I don't understand why the Republicans in the Senate continue to choose tax cheats," those avoiding taxes through offshore tax havens, "when they ought to be standing with 21 million families."

___

The bill is H.R. 4351.

[HBGOnline]

This just proves how fucked up politicians are. The Democrats are out of control and have shown their true colors being in charge this year. Absolutely nothing got done in Congress this year except multiple "investigations". They had an opportunity and blew it.

Look for the Republican clean sweep in 2008!!!

[Mickulz]

Yeah, so the Republicans can do the same thing.

[freddyv]

I've heard it argued that gridlocking is to thank for the economic prosperity during the Clinton Administration. The gist of it is that when you have a President of one party, and a House/Senate of another, the two forces essentially block each other from passing legislation that screws up the natural flow of the economy. The unimpeded economy then flourishes.

It's kind of funny in a way, if it's actually true.