Alternative Minimum Tax Will Snare 28 Million Earners

An unintended tax hike is about to affect about 28 million Americans. This hike would be due to a tax aimed at ensuring a minimum tax for the wealthy Americans. But this amount has not been fixed, hence the hike in tax. The concept of Alternative Tax is not new. It was set up decades ago, when it was discovered that legal tax breaks and tax loop holes were being used by the wealthy Americans to avoid taxes. However, the tax has not been indexed for inflation. Hence, this tax needs to be reviewed each year.

This year, the extension of tax rebates that have been given to all Americans under President George W. Bush, is being debated. This has also brought to the fore, the issue of Alternative Tax. If the issue of Alternative Minimum tax is not resolved, the year 2013 would be treated by the IRS as though the Alternative Minimum tax has expired.

This would cause tens of millions of Americans to come in a higher tax bracket only due to delay in the enactment of the rules that apply to certain tax payers who have certain tax credits. Both major political parties, Democrats as well as Republicans have expressed support for the Alternative Minimum Tax but differ on the tax rates and have not been able to achieve a deal on that aspect.