“The Family and Business Tax Cut Certainty Bill of 2012 (Sen 3521 ) would patch the alternative minimum tax (AMT) for the 2012 and 2013 tax years for an estimated revenue loss of $132.2 billion.”
Full text of the bill: http://www.govtrack.us/congress/bills/112/s3521/text
It also extends several other popular tax provisions: the deduction for teachers who buy supplies for their classrooms; the exclusion from income of debt forgiveness related to one’s primary home (ie. if your home is foreclosed and your debt discharged, without this extension, the discharged debt is taxed as income!); the ability to make tax-free distributions from IRAs to charities; and more. But it’s the AMT patch which is the real headline here.
The numbers are shocking. And make no mistake – more people fall into AMT now because they’ve had tax cuts to their “regular” income taxes. If the Bush tax cuts expire, the AMT collects an “extra” $1.3 *trillion* over the next 10 years. If they Bush tax cuts are extended, the AMT collects an “extra” $2.7 *trillion.
What we need is not an extension of the AMT adjustments (congressional silliness theater which we go through every year) or a debate about extending or not extending the Bush tax cuts. We need fundamental tax reform. The current situation presents uncertainty for everyone from individuals and businesses to investors (including the foreign countries who buy US Treasury bonds) and rating agencies. If Congress doesn’t get their act together in a credible way, there’s no reason to think further downgrades won’t be forthcoming.
Simpson-Bowles is as close to a decent blueprint as anyone’s seriously suggested since the Reagan days. We should be ashamed of our leadership for not addressing it or adopting at least some of its ideals. The current system of borrowing more every year and making annual adjustments and patches to the code to keep things like AMT from hitting more people, or nearly letting the estate tax go back to 2001 levels and at the last minute patching it for two years to maintain the current levels – now set to expire at the end of 2012 when they’ll revert – is just shameful, unpredictable, way too politically volatile, and absolutely is hurting the economy and therefore every person in the US.
There’s an expression, particularly apt for financial planners and our clients, which says that he who fails to plan plans to fail. However, our government is making it nearly impossible to plan. We all deserve better.
The link below is to an article at CCH, tax experts, about the AMT patch and the effect on deficits if a permanent AMT patch were implemented.
Simpson-Bowles is as close to a decent blueprint as anyone’s seriously suggested since the Reagan days.
I absolutely, totally and completely DISAGREE with you on this!!!
Please take a look at some of the following discussions of Simpson-Bowles. Also remember that this whole “scary, scary deficit” meme has been promoted by Pete Peterson, a richer-than-sin billionaire who has no thought for anything other than his own money.
And re Pete Peterson, who’s one of the main forces behind Simpson-Bowles:
Those of us who care about the values of this country — the ones developed by FDR in response to the LAST rich-guy-caused depression — namely decent wages, health care, education, protection of the environment [okay, later than FDL], an honest stock market, consumer protection via regulation of food & drugs, are shocked and outraged that those with the most money are so ready to screw everyone else. And thanks to Citizens United, they [Pete Peterson especially] have used their money to brainwash people to vote against their own interests.
Simpson-Bowles is HORRIBLE, as are the two men after which it is named. Really, concern about “the deficit” and issues re social security, Medicare and Medicaid can be dealt with without screwing people for the benefit of the rich. [For example,just lift the “cap” on wages subject to social security taxes from the current $106,000, and the program will be solvent instantly.]
It is extremely troubling to me that you would approve of and promote this Neanderthal program.
Simpson Bowles is not perfect, but it does meet some criteria that economists in general support: lower rates, broader base, less “tinkering” through tax code favors.
The key, however, regardless of Simpson Bowles, is we need predictability in our tax code, not annual patches and fixes as we keep doing with the AMT and steady streams of “kick the can down the road” short term deals. Deficit reduction is absolutely a must – we simply cannot keep borrowing and spending the way we are, but long term tax reform is the only credible way to do this.
If someone else would propose anything rational – instead of the constant short term political “fixes” we keep getting, I’d praise it, too. All we have is S-B, and it’s quite dead anyway, as both Obama distanced himself from it, and Ryan was instrumental in the failure of the committee. Both parties hated it. But both parties are also hiding their heads in the sand regarding tax complexity and the astonishing growth of our national debt.