Here at DQYDJ, we like to write about things that have unintended consequences – a perfect example is the Alternative Minimum Tax, which was intended to stop the very rich from having a 0% tax rate. Of course, since that tax was not indexed for inflation, it has creeped its way into the middle class’s check book. Today we’ll link you to an article on another distortion of the AMT – deepening the “Marriage Penalty”, a situation where two singles would be better off, tax-wise, staying single as opposed to marrying.
alternative minimum tax
The Alternative Minimum Tax, a tax enacted in 1969 to set a minimum level of taxation, has had major mission creep – especially in the last 10 years. The Alternative Minimum Tax is a secondary set of tax brackets which disallow certain deductions which are allowed under the normal tax code. The tax was enacted since 155 rich households avoided paying tax altogether back when the tax was started. Today, even with annual ‘patches’ by congress, the alternative tax bracket is hitting more and more people – 4.5 million tax payers last year. Hope you’re having fun doing your taxes this year!