Saturday, April 15, 2006

Parents lose tax break - thank Congress

Not only is education largely unfunded, now parents will be getting taxed without the benefit of long-standing tax breaks. The NY Times gives you the heads up...

With Tax Break Expired, Middle Class Faces a Greater Burden for 2006
Published: April 16, 2006

The tax break that expired at the end of 2005 limited the alternative minimum tax to 3.6 million taxpayers, of which 2.1 million were families with children.

This year 18.9 million taxpayers are facing the alternative levy, with 11.8 million representing families with children. Without Congressional action, those affected will pay $26.6 billion more in federal income taxes for this year. Almost the same amount, $24.1 billion, will be saved by all investors, the Tax Policy Center estimated. Actual savings for investors are likely to be higher if recent stock market growth continues.

The alternative tax was originally adopted in 1969 to ensure that people who earned the equivalent of more than $1 million in today's dollars did not live tax free. It has not been fully adjusted for inflation and was not integrated into the Bush tax cuts. In addition, Congress in 1986 made basic changes in what kind of deductions are counted in determining whether one has to pay the alternative levy, causing it to become a tax on the middle class.

In the beginning it took away exotic breaks to high-income taxpayers who paid little or no tax. Now it denies people exemptions for themselves and their children and deductions for state income taxes and local property taxes.

Just one-tenth of 1 percent of the increased alternative tax is being paid this year by those making $1 million or more, the Tax Policy Center estimates, even though this is the only group affected by the original version of the levy.

And you all thought your kids would be the first generation to not do as well as their parent's generation.

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