Rep. Mel Watt (D) was among 64 House members — three others were from North Carolina — to vote against a temporary fix in the Alternative Minimum Tax. Without the change, about 16 million more income tax fliers — many of them middle class families with lots of deductions, ie, kids — would have had to pay the tax in 2007 compared to 2006. The average AMT bite: About $2000 more in tax to Uncle Sam
The AMT was created in 1969 with the intention of catching fat-cat taxpayers who loaded up on tax shelters, effectively reducing their tax rate to zero. The idea was that no matter your deductions, you were going to pay some tax if your income was sufficiently large enough. Long story short, the past couple decades of tax policy — with bracket creep, ever more deductions, credits, phase-ins, phase-outs — have pulled more and more taxpayers into the AMT net.
One common formula: Have a big family in a high tax state, with a big mortgage deduction. Hello, AMT.
How far out of step was Watt on this issue? Arch-liberals John Conyers, Barney Frank, and John Dingell all voted for the AMT tweak. We need a permanent fix for our broken federal tax code, true. But using the AMT to punish families is no way to get there.
Update: The Locke Foundation’s Paul Messino has more on the AMT.
