"The Alternative Minimum Tax...was created by Congress in 1969 to affect 155 wealthy Americans. Because it was never indexed for inflation, those original 155 taxpayers has increased to affect about 3.5-million in 2006."
Rudy Giuliani on Wednesday, September 5th, 2007 in a newspaper column
Adding up the AMT
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That shook lawmakers into creating the alternative minimum tax in the Tax Reform Act of 1969. It was created as separate income tax system to ensure people did not use loopholes to avoid paying any taxes at all.
Because of the law, people who are able to use deductions and legal shelters to lower their tax bill too much must pay a minimum income tax, the AMT. Under the law, taxpayers who meet the AMT threshold must pay the higher tax bill, whether it's their actual bill or the AMT.
The trouble is that, unlike the standard income tax system, the AMT is not indexed for inflation. So as time moved on, growing numbers of people have fallen into the AMT program and, as a result, are paying higher taxes.
In 2006, 3.5-million taxpayers fell under the AMT, which equates to about 4 percent of American taxpayers, according to the Congressional Research Service. But that was with a special limit — "a patch" — imposed by Congress.
So, Giuliani has it right. All of it.
Published: Thursday, November 1st, 2007 at 12:00 a.m.
Subjects: Taxes
Sources:
House Ways and Means Committee, Testimony on the Alternative Minimum Tax, Eric Solomon, assistant secretary of the U.S. Treasury, March 7, 2007.New York Times, "The Untaxed Rich, Found and Then Lost," David Cay Johnston, March 4, 2007.
Tax Policy Center, The Individual Alternative Minimum Tax (AMT): 11 Key Facts and Projection, Len Burman, Julianna Koch and Greg Leiserson, Dec. 1, 2006.
Congressional Research Service, "The Alternative Minimum Tax for Individuals," Greg A. Esenwein, Jan. 9, 2007.
Interview, Steve Forbes, senior economic adviser, Rudy Giuliani campaign, Oct. 4, 2007.
"Rudy Giuliani: Lower tax rates will help all Americans," by Rudy Giuliani, Manchester Union Leader, Sept. 5, 2007
Written by: David DeCamp
Researched by: Angie Drobnic Holan
Edited by: Scott Montgomery
Articles about this statement:
Not just for the richest anymore
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