November 9th, 2007
07:25 PM ET
7 years ago

Middle class tax mess

Watch Jessica Yellin's report on the alternative minimum tax.

WASHINGTON (CNN) - Congressional Democrats are pushing a proposal that would protect the middle class from the expanding reach of the alternative minimum tax.  But, Congressional Republicans are crying foul.  Jessica Yellin reports.

Related: Alternative minimum tax fix passes House

Click here to see CNN's new political portal: CNNPolitics.com


Filed under: Congress
soundoff (24 Responses)
  1. Hank, Fort Myers, Fl

    To our elected officials in Washington. Thanks again boys and girsl. This little bonus, along with increases in property taxes, and homeowners insurance–plus food, gasoline, and other little necessities promises to make 2008 a great year. Unlike previous decades though–my earnings will stay pretty much the same if not decline–assuming I remain employed and don't get downsized or off shored. Thanks again from all the pensioners and wage earners in Florida! South America is looking better all the time. Last one out turn off the lights.

    November 10, 2007 08:14 am at 8:14 am |
  2. Pete, T.S. FL

    Republicans object to higher taxes on investment fund managers in bill.

    If negotiations fail 21-25 million middle-income taxpayers could be hit by AMT.

    Defend that Kool-Aid drinkers!

    November 10, 2007 10:18 am at 10:18 am |
  3. r schier norwalk, ct

    c'mon....I want to see how many billionaires post to this board...anyone that supports BUSH and his threatened veto of what will be a further rape of REAL working people, must either be one, or be a TOTAL FOOL...How do you DEFEND some paper trader making a half billion dollars PER YEAR that pays ONLY 15% on this income, while people who do real HANDS ON work are taxed almost at TWICE the RATE....PLEASE anyone who is not a BILLIONARE, explain SPECIFICALLY why they want to lend support to this RAPE....

    November 10, 2007 11:36 am at 11:36 am |
  4. Kelly, Boston and Massachusetts

    We should stop transfering dollars in the form of "help" from one group of people to another. As long as there is waste, overspending, and unaccountable dollars in government programs, then there is no need for anyone – "rich" or not – to have an increase in taxes. Thank God for Conservative Republicans, though...Liberals tend to make things even worse.

    November 10, 2007 11:37 am at 11:37 am |
  5. Steven in Charleston

    I am always amazed at how quickly the conservatives rush to a "you hate the rich and want to punish them" accusation the moment anyone proposes increasing the cap gains tax, or re-addressing how carried interest is handled.

    We need two things to make our economy go and grow: capital to fund the businesses and worker bees to do the work. This endless debate over which side is more important is just stupid, because without one, frankly, the other is screwed.

    The idea of taxing all income - be it the efforts of labor or of capital - the same, is not "hate the rich" it is simply applying basic fairness.

    The AMT is a deadly tax, and one that threatens to wreak havor on millions of American families. Re-addressing it HAS to be job one. And in case some of the neo-cons on here missed Economics 101, here is a refresher - if a family pays MORE in taxes, they have LESS to spend on consumer goods and services, which is what drives our economic growth.

    November 10, 2007 12:38 pm at 12:38 pm |
  6. Rick, Chicago Illinois

    Kelly, Boston and Massachusetts,

    A REPUBLICAN complaining about lack of oversight" to avoid "waste, overspending, and unaccountable dollars"?

    LOL .. you're a total joke!

    Fix your OWN party first – then point the finger at democratic liberals.

    Thanks in advance!

    November 10, 2007 12:42 pm at 12:42 pm |
  7. Michael Love Winston-Salem, NC

    Energy waste in America is omnipresent, sinful, horrendous, and fixable.
    (1) We over heat and over cool our homes, businesses, offices, schools, churches, etc...
    (2) 10's of millions of outdoor lights burn during the day.
    (3) Most Americans do not minimize their driving.
    (4) Over packaging is the norm. Recycling is inadequate. Our landfills are busier than ever.
    (5) America's obsession with road construction is the ultimate contradiction.
    The ONLY way to reduce energy waste and over demand is by using the economics of taxing energy in lieu of Federal Income Tax. Until the price of gas is $6 to $8 per gallon, America will not reduce over consumption and energy waste. Federal Gas Tax should be $4 to $6 per gallon and offset by making Federal Income Tax begin at $60k. Only with a tangible/dollar reward will Americans care to conserve. In the mean time the USA continues to give away its economic and political wealth to the Middle East, so we can continue our hedonistic energy waste. Know that the Islamic dominated OPEC cartel is eager to allow supply and demand market forces to drive gas prices to $8/gallon. $100+ barrel oil enables those who want to annihilate us, the money needed to buy the weapons to do so. Growing geopolitical unrest is linked to global competition for energy and natural resources. If global demand for energy is not dramatically reduced; World War is inevitable.

    America can no longer continue to 'do business as usual'. Ford and General Motors must transition to the lucrative business of building solar and wind energy 'producers' for the world's 6,700,000,000 people reason$. Otherwise, Ford and GM are headed for bankruptcy, which will leave 100 million Americans unemployed, ruin our economy, and lead to anarchy. The world cannot continue to support all the automakers. We are running out of petroleum. Wake up !
    Mass transit must reward those who reduce their driving and thereby become FREE, safe, clean, and convenient.
    The ONLY way Americans will significantly reduce energy waste and over consumptions is by the economic incentive of taxing energy – not income!

    November 10, 2007 01:16 pm at 1:16 pm |
  8. Michael, Houston TX

    Let's see relief for millions of middle class tax payers versus RICH fund managers and 50,000 ultra millionaires or billionaires...hmm tough choice.

    Uh republicrites – tax and spend republicrites – listen closely – the bait and switch game you play of – we won;t do anything until you do it our way will not work this time.

    I too would like to see the AMT go away, but I sure will take this over doing nothing – and yes just saying "we need to do better" IS DOING NOTHING...

    yes we notice and will be watching, and as a moderate I promise you, if you let the AMT hit my middle class wallet, I guarantee you, my friends and I will do everything we can to support, campaign and undermine every republican candidate up for election.

    Republican now seems to equal = support for our wealthy friends at any cost.... more than ever before and the opposition to this in favor of billionaires over the middle class proves it...having the wealthy pay 35% when they make billions will not stop that same group from investing, they will still choose to invest and make money.

    We'll be watching you all, and the village idiot George.

    November 10, 2007 01:33 pm at 1:33 pm |
  9. Raymond, El Paso TX

    The GOP (Greedy Old Party) shows it's true colors!

    If this doesn't prove to American voters that Republicans work only for the ultra rich and could care less about the middle-class, I don't know what will.

    November 10, 2007 02:07 pm at 2:07 pm |
  10. Eric, from THE Republic of Texas

    The AMT originated in 1969, not out of need for additional tax revenue, but rather out of spite for successful Americans.

    The AMT was designed simply for the purpose of punishing the rich and successful, who were at the time, and who continue today, to creatively skirt their way around our massive taxation system.

    Why did/do they feel the need to skirt the system? Because many people feel that THEY have earned their income, not the government, and the government has no right to confiscate the fruits of hard work, sacrifice and accepted risk. It wasn't the government that sacrificed time away from family to become successful... it wasn't the government who accepted the financial risk of opening a business... it wasn't the government that risked personal financial ruin in order to take the chance to get ahead in life.

    Simply put, our taxation system punishes success, motivation and entrepreneurship and rewards laziness and mediocrity.

    What the 1969 liberals didn't consider in their rabid socialistic quest to punish the successful among us, is that if not adjusted for inflation, their cudgel for the rich would eventually end up pummeling normal everyday middle class people. Oops... talk about unintended consequences.

    Since the AMT was designed not out of need, but rather out of spite, why not simply DO AWAY with the AMT altogether, instead of looking for someone else to pin it on?

    Oh, that's right... I forgot... the AMT is used as a political football for liberals to continue kicking around, now nearly 40 years later. Liberals can still trot it out, saying the AMT is necessary because the rich "don't pay their fair share."

    ...when in reality, the wealthiest 25% of all income earners pay nearly 85% of all federal taxes, with the wealthiest 1% paying nearly 37% of all federal taxes... that's 1 percent of earners who pay more than ONE THIRD third of all federal taxes... insane!
    (not my numbers... they're from the IRS website)

    I'll make a prediction today... if the Congressional Liberals get their way on the AMT, you can expect to see an IMMEDIATE, IMMEDIATE uptick in the unemployment rate. Bank on it.

    Who do you econ-challenged Americans think actually makes America's jobs?

    I've never once been offered a job by a poor man. Think about it.

    Like it or not folks, if you punish the rich for being successful, they'll take their money elsewhere (overseas) where they won't get punished... if that happens and we all lose out.

    (Still dedicated in my drive for the institution of "Universal K-12 Economics Education")

    November 10, 2007 03:39 pm at 3:39 pm |
  11. Pete, T.S. FL

    Eric, from THE Republic of Texas

    You spout more crap than a herd of bulls.

    Stop with the Karl Rove style fear mongering.

    November 10, 2007 06:06 pm at 6:06 pm |
  12. Raymond, El Paso TX

    Leona Helmsley: “only the little people pay taxes,”

    Warren Buffet: "Tax breaks for corporations (and their investors, particularly large ones) were a major part of the Administration's 2002 and 2003 initiatives," he wrote. "If class warfare is being waged in America, my class is clearly winning."

    ...and let's not even get into all the offshore, tax-sheltered accounts owned by the ultra-rich.

    November 10, 2007 06:08 pm at 6:08 pm |
  13. Henry Miller, Cary, NC

    Ron Paul.

    It's on his agenda to abolish the IRS, which would presumably abolish the AMT as well, as well as abolishing as much as possible of the vast waste that constitutes most of the Federal budget.

    There are a lot of good reasons to vote for Mr Paul, but even if the philosophical ones don't appeal to you, maybe not being ripped off by the Feds for 40% of your annual income might.

    November 10, 2007 08:40 pm at 8:40 pm |
  14. Ron Nebraska

    I have always found it ironic, for the lack of a more descriptive word, that Republicans always rail against distribution of the wealth to the lower classes and middle while at the same time their policies redistribute the wealth from the lower classes to the elite.

    November 10, 2007 09:30 pm at 9:30 pm |
  15. xtina - chicago IL

    I am an advocate of removing all federal income tax and establishing a national sales tax instead. We would not get taxed on what we earn, just on what we buy. Under this method, people who "hide" income, those who work for "cash", and those who don't file income tax returns such as drug dealers, would pay into the federal rev. system every time they bought something. Does anyone have knowledge of this proposal? What are the downsides? I believe both Ron Paul and Gov Richardson are in favor of it.

    November 10, 2007 09:48 pm at 9:48 pm |
  16. A support of Ron Paul.

    End all taxing exept for sales taxes and All Problems Solved. If we are only taxed on what we spend then everyone is taxed on an equal basis.

    November 11, 2007 08:02 am at 8:02 am |
  17. r schier norwalk,ct

    "Like it or not folks, if you punish the rich for being successful, they'll take their money elsewhere (overseas) where they won't get punished… if that happens and we all lose out"

    The "republic of texas" is a fairy tale land removed from reality...WHERE have you BEEN for the last 5 years????? The money is ALREADY going overseas....and yeah, it sounds real equitable when 1% pay 37% of taxes, when in reality they pig-out on 48% of the income...besides, I have yet to hear any rich-kissing republican tell me SPECIFICALLY why hedge fund earnings (also tell me what these cream-skimmers REALLY do for economy, or society for that matter) should pay at 15%, as opposed to 27-28% ?????? Until you answer that one, you can't be taken seriously. And what, your implying that people that aren't rich, don't necessarily bust their *ss ????
    If a capitalistic system had inherit controls, to ensure some notion of balance, then this would not be an issue...but it doesn't. Look at CEO pay for instance. I don't understand how a CEO is worth 300x as much, as those who perform the day-to-day tasks of an organization. No one is going to tell me that the whole performance of a fortune 500 company rests with one person. But the real point is we only want billionaires to be taxed at the same effective rate, and right now, some appear to be taxed at 1/2. Yeah,
    and I wish Texas was really a separate republic, which would have made it impossible for us to endure BUSH....

    November 11, 2007 09:39 am at 9:39 am |
  18. Terry, El Paso, TX

    "We should stop transfering dollars in the form of "help" from one group of people to another. As long as there is waste, overspending, and unaccountable dollars in government programs, then there is no need for anyone – 'rich' or not – to have an increase in taxes. Thank God for Conservative Republicans, though…Liberals tend to make things even worse." – Kelly, Boston

    The free lunch bunch is delusional. You have to pay the bill for the benefits of living in an organized modern society. It is time for a return to Liberal fiscal responsibility. Conservatives have proven that, at least in this generation, they are incapable of government.

    % of federal budget financed by deficit spending 1947-2003
    Truman Liberal 0%
    Eisehnower Moderate 3%
    Kennedy/Johnson Liberal 6%
    Nixon/Ford Moderate 14%
    Carter Liberal 13%
    Reagan Conserv 25%
    Bush (the good one) Conserv 28%
    Clinton Moderate 6%
    Bush (other one) Conserv 32%

    November 11, 2007 10:14 am at 10:14 am |
  19. Brad, Stockton, CA

    Get real... the republicans will defend whoever provides the most support for their re-elections, if you were a republican, who would you support? For that matter, the democrats are no different; their interests are in their own individual futures.

    November 11, 2007 10:44 am at 10:44 am |
  20. Bob, Roxboro, NC

    No one can earn a million dollars honestly.
    William Jennings Bryan

    With that in mind, How about a level playing field?

    November 11, 2007 01:24 pm at 1:24 pm |
  21. Michael, Houston TX

    Terry, thanks for your educated comment! When I listen to the extreme left or right spin doctors from their respective mythology departments – and the trend for most people to take what they say as factual, I can see why we have the issues in this country (and any other for that matter) that we do. The mob, as in roman times, does not wish to delve into issues, they wish to be entertained, and nothing has changed – short attention spans and immediate needs are what interest the mob. Every once in a while though a little light can shine through and make them all realize that all extremists have one goal – to subjugate everyone to their way of thinking.

    Terry wrote:
    The free lunch bunch is delusional. You have to pay the bill for the benefits of living in an organized modern society. It is time for a return to Liberal fiscal responsibility. Conservatives have proven that, at least in this generation, they are incapable of government.

    % of federal budget financed by deficit spending 1947-2003
    Truman Liberal 0%
    Eisehnower Moderate 3%
    Kennedy/Johnson Liberal 6%
    Nixon/Ford Moderate 14%
    Carter Liberal 13%
    Reagan Conserv 25%
    Bush (the good one) Conserv 28%
    Clinton Moderate 6%
    Bush (other one) Conserv 32%

    I also think we should do away with the AMT, but I will take this legislation as opposed to doing nothing. The rich will still invest, they won't stop, they will however lobby very hard to change the tax code and make strong use of every loophole they can in the short term.

    Yes the rich may pay the most, but let's sketch out a quick example....

    Ultra Rich guy has
    $10 Billion and makes 5% return on his 10B equals $500,000,000 and let's say he is taxed 37% that means he paid $185M in tax and has $315,000,000 left to spend, any way he wants or more likely to reinvest a large portion of this. Please tell me again why this guy should not have to pay 35% instead of 15% on his paper (hedge fund) investments?

    Please tell me how this rich guy suffers again? There was too much noise from the luxury yacht engines and the champaign party in the background and I missed the explanation the first time around.

    Cut me a break – to reiterate, the rich will not stop investing, they will simply gripe more about it.

    November 11, 2007 04:56 pm at 4:56 pm |
  22. Eric, from THE, yes THE, Republic of Texas

    r schier in norwalk,ct said "hey, why shouldn't those richy rich people be taxed more?"

    Nice.

    If I earn a cool million a year, do I necessarily use any more free government services than a person earning say, $30K? No, not at all. In fact, what you're proposing is a system whereby the people paying the most into the system will not be allowed to get ANYTHING back out of the government.

    In other words, ultimately, a system where 1 percent essentially pays to fund the lifestyle of the remining 99 percent. One host, millions and millions of parasites.

    That's a house of cards, and eventually the super wealthy are going to get sick of it and move their investment dollars elsewhere. When that happens, there will be fewer and fewer investments in this nation, and with it, fewer and fewer new jobs created, fewer and fewer new products developed, fewer and fewer new expansions of businesses, corporations, etc. etc.

    He also said something about CEOs should not earn more than the common man sweeping the floor at night. Uh, did Michael Jordan earn more than the vendor selling beer and popcorn at the Bulls games? Yeah.

    And why? Because Michael Jordan was an investment and a hot and limited commodity. Because the shareholders and owners realized that having a superstar on board, regardless of cost, was ultimately going to earn them more money in the long run. And it did.

    Now do companies hire bad CEOs from time to time. Sure they do. But are said CEOs smart enough to require a golden parachute as a requirement for signing on. Duh, of course. As would I or ANYONE with half a brain.

    Let's have an Economics lesson, shall we? Question: What is the purpose of a business or corporation?

    To build products, good and services? To provide jobs to the local community? To be a good steward of all that is right and good and fair in the world? Wrong. All of them wrong.

    Answer: The purpose of any company or corporation is to earn a profit for shareholders. Period.

    Once you realize and understand that fact, you'll be much happier in life and can adjust accordingly.

    I used to be a candy-eyed socialist dreamer like many of you. Then I grew up.

    November 12, 2007 11:10 am at 11:10 am |
  23. Mike USMC 95-99

    "If I earn a cool million a year, do I necessarily use any more free government services than a person earning say, $30K? No, not at all."

    VERY UNTRUE...

    The person who makes that million uses the infrastructure of that nation in order to complete their tasks required to make that "million." Therefore; they do use the vauge "system," that you think they do not, to help them earn that million...Be it national defense, police & other local services, roadways, port terminals, Well, you get the idea...

    Those who make "millions" do use more than the % that they are required to pay than those who do not use/need these services but are still required to pay...If your argument holds true, then no one who doesn't have kids, should not be required to pay property taxes (which is a flawed revenue system IMHO) to keep schools going?

    Rather shortsighted....

    There is an economic trade-off and those who use this nations' infrastucture are obligated to help pay for it...

    Again,

    If the argument of the Conservatives is to restrict government reallocation to the people, then why do Conservatives work to redistribute government resources to those who already have them?

    Welfare by any name is still welfare...Too bad you & your ilk cannot see that...Hence; why 2006 was only the tip of the Iceberg for HoR & Senate elections in 2008...

    You're "conservatisim" going back to the political freezer for about 20-30 years...Ala 1932-1980

    November 12, 2007 12:49 pm at 12:49 pm |
  24. Michael

    Eric, you must be one of those Republican voters (aka RepubliCONNED) that think they can get wealthy by voting Republican. I've never read so much garbage from one person. You parrot exactly what is spouted on Faux Snooze. You must have been left behind as a child.

    Even Warren Buffett (a registered Republican and one of the top 5% of money earners in this country) said the current system of taxation favored the wealthy.

    If any of you ever want to see a Republican have a mental breakdown, tell them that it's okay to think for yourself. They can't stand the thought of having to actually analyze what they read and hear on the news.

    December 30, 2007 05:37 am at 5:37 am |