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One Out Of Every Six U.S. Taxpayers Will Be Hit By A Tax Increase Averaging $3,900 This Year And Most Of Them Don’t Even Realize It

Did you know that there are two different sets of federal income tax rules in the United States?    It’s true.  Each year, most U.S. taxpayers either pay income tax under the system that most of us are familiar with or they pay the “Alternative Minimum Tax” – whichever amount ends up being greater.  For years, the U.S. Congress has passed one year “fixes” that have exempted millions of middle class American families from the Alternative Minimum Tax.  This has essentially been a huge tax cut each year for those millions of American families.  But this year, the Democrat-controlled Congress has not passed a “patch” for the Alternative Minimum Tax.  So now one out of every six U.S. taxpayers is going to be hit by the Alternative Minimum Tax.  The taxpayers most likely to be affected are married couples, very large families, home owners and taxpayers in states that have high state and local taxes.  The average tax increase that these taxpayers will be facing is going to be approximately $3,900 and most of them have no idea that it is coming.  At a time when an increasing number of families is barely getting by, a tax increase of this magnitude is simply going to crush the American Dream for literally millions of families.  Talk about a cruel surprise for tens of millions of Americans this upcoming tax season! 

Would you be able to sit down and write a check for an extra four thousand dollars this upcoming April?

So where in the world did this insane alternate tax system come from anyway?

Well, back in 1969 the Alternative Minimum Tax was implemented with the intention of catching high income individuals who were avoiding paying taxes altogether by abusing certain loopholes.  But unfortunately, the Alternative Minimum Tax has not really been adjusted for inflation since that time, so now the Alternative Minimum Tax applies to millions of ordinary middle class American families.

Fortunately, the U.S. Congress has been passing a “fix” to this problem each year to avoid this problem, but so far this year the U.S. Congress has not acted.

So now we are on the verge of a complete and total mess.

According to the Congressional Budget Office, approximately 4.5 million American households paid the Alternative Minimum Tax in 2009.

If nothing changes, 27.2 million American households will pay it in 2010.

Are you starting to get the picture?

Do you know if the Alternative Minimum Tax will apply to you this year?

You might want to find out.

The temporary reprieve for middle class taxpayers that Congress passed last year expired at the end of 2009.

Therefore, every penny that you have earned in 2010 is subject to the Alternative Minimum Tax if it applies to you.

Of course Congress could still act and help all of us out by doing something about the Alternative Minimum Tax by the end of the year.

But considering the fact that this Congress is so incompetent that they wouldn’t be able to find their feet if they weren’t attached to the end of their legs, it is hard to be able to count on them to do anything correctly.

In fact, there is very little appetite in Congress right now to do anything that would add to the federal budget deficit in future years.

The truth is that simply eliminating the Alternative Minimum Tax without making equivalent cuts in U.S. government spending would add approximately $626 billion to the national debt over the next ten years.

So this Congress might just decide to let the middle class suffer.

In fact, all of us will be coughing up more taxes soon.  In all, there are more than 100 tax provisions that have either already expired or are about to expire.

2011 is already being dubbed “the year of the tax increase“, and unless something changes really, really quickly many of us are going to get some really nasty surprises early next year.

So are you ready to pay even more taxes?

Are you ready to be squeezed like a melon even though it is very likely that the U.S. government will never have a balanced budget ever again?

The U.S. government has piled up the biggest mountain of debt in the history of the world in our names, and in the end we are all going to pay for it in one way or another.

The Beginning Of The End - The New Novel About The Future Of America By Michael T. Snyder
  • Gary

    I am so underemployed and poor this is no concern to me. I wish this was a concern as that would mean I am somewhat above the poverty line and maybe clawing my way back into the middle class.

    I guess there is one nice thing about being poor-taxes are the farthest thing from your mind.

    Now if they would simply tax the rich HARD and spread the wealth…

    It really gets tiring eating stale food from the food pantry while there are tons of folks eating at the fancy restaurants as I drive home from work. I have never made this little money and you know what? There are a lot of pissed off formerly middle class who are getting very upset at the rigged game here in the BRA (formerly USA). I was talking with a black friend of mine and she said its not really about race or black vs. white but the poor against the rich. She said the repubes simply use race conflict as a distraction for the gross unequal dist of wealth and income.

  • http://www.rickety.us rick@rickety

    This is a horrible tax. I had to pay it one year. I learned quickly to reduce my income. My wife was wanting to work part-time instead of full-time so she went ahead. I make sure I didn’t work overtime.

    When will governments learn that high (or unfair) taxation discourages productivity?

  • Gary

    Hey Michael-How about redoing your headline to say 5 out of 6 will not see any tax increase? If this is your trying to get sympathy for rich folks we see through it.

    Nice try, NOT!

  • Tom

    So how do you propose we manage to pay for these two wars without a tax increase. We haven’t been paying for these wars for years, how can Americans be so dense not to realize that all this spending costs the country. You should have been wetting your pants about taxes about 8 years ago. Suck it up! Delaying the inevitable is only going to put this problem on our children s children.

  • Jackson

    Oh, I do realize that taxes have been increased. Where I live, they passed a 1% sales tax (which includes purchase on food and medicine), ostensibly to provide for the social safety net. However, reading the fine pring, 3/5s of the tax will go to paving and creating highways for trucks. In fact, the area of the country I live in is rapidly devolving into one large truck stop. And our state takes pride in its road system while its schools and healthcare are under stress.

    In addition, our county just increased the mil levy on property. Property in my state is based on appraisal values set by the state. Talk about a conflict of interest. The property owner must prove that the state is in error in order to receive a reduction. Well, now that property values have fallen by 10%, the government, which normally automatically receives tax increases based on rising property values is now having to raise the rate of its taxes to compensate for these declining property values, resulting in an increase in my property taxes of 10% even though my property saw no rise and probably fell in value this last year.

    As I explained to my county commissioners before they voted to increase the taxes, people have been hammered by falling asset values of their retirement savings (those that invested in the stock market lost 40% of their value in 2008 on average). To compensate for these losses, those of us who have jobs are rapidly trying to save more, but then along comes a tax which hammers our ability to save. The county commissioners nodded and then voted the tax increase anyway. Outrageous.

    So yes, this article speaks the truth. I pay my property taxes and do not send them through escrow. Most people roll their property taxes into escrow and therefore pay little attention to the tax statement that comes in the mail showing the inflated value of their property, etc. Sad but true.

    The government counts on your unawareness to levy these taxes.

  • Jackson

    Regards federal taxes – three solutions. End the wars – save $300 billion a year. Halve the military budget. Save $350 billion a year. Eliminate the domestic spying. Save $150 billion a year. I’m tired of paying for the government to illegally spy on me. I already know what I’m doing. Thanks.

  • El Pollo de Oro

    During the first six years of the George W. Bush era–when Republi-Cons still controlled both houses of Congress and had a Republi-Con president to work with–they could have abolished the AMT. Why didn’t they? The late Irv Homer, a Libertarian talk show host in Philadelphia and a blistering critic of the Republi-Con Party, used to theorize that it wasn’t a priority for Republi-Cons because the AMT is more likely to affect blue states than red states. The way the AMT is structured, it has a way of hitting people in higher-tax states like Massachusetts, New York and California. That’s why you hear the AMT horror stories about the middle-class cop or the middle-class school teacher in L.A. or Boston who got socked with it.

    Given the country’s record deficits, it is most unlikely that the AMT will be abolished anytime soon–not under the Republi-Cons, not under the Demo-Craps. The Banana Republic of America (BRA) is so far into the hole financially that the IRS is going to need every source of revenue it can get its hands on, especially if the neocons gets their way and the BRA goes to war with Iran. Truth be told, the Bill Kristols of the world would probably love to see the AMT expanded as long as they don’t have to pay it and the burden falls on what is left of the American middle class. But here’s the thing: the IRS’ favorite cash cow, the middle class, is DYING. The rich know how to get out of paying taxes, the poor don’t pay a lot of taxes (nor should they), and the middle class are becoming the neo-poor. Remember Leona Helmsley’s infamous comment that taxes are for “little people,” not the rich? By “little people,” she meant the middle class and small business. But the little people have gotten much smaller–too small to contribute a lot of tax revenue. So going forward, where is the tax revenue for roads, cops, firefighters, water purification, the military, and other things going to come from?

    Answer: the tax revenue simply won’t be there. So get ready to live in a poor, violent, dangerous, unstable Third World hellhole with a crappy infrastructure, dirt roads, unsafe drinking water, rat infestations and violent crime galore. Hmmm, maybe it wasn’t such a good idea for neocon globalist bastards to kill off the American middle class, now was it?

  • Joe

    Gary,

    Everyone is seeing a tax increase. Inflation is how the government taxes an ignorant public. Look at increases in prices of everything lately, from your food to the stock market.

    There is a criminal global elite and then there is “the rich” which are those few people in your town that climbed out of serfdom. They aren’t the enemy.

  • Not so Mad Max

    This is what happens when you have large government and elect dim wits to office. You can trace this disaster to every administration since Johnson doesn’t matter if they have an R or D after their name. Johnson wanted to fight Vietnam (A dumb idea) and have money for the Great Society (laudable at the time in hind sight another dumb idea) he didn’t want to raise taxes so he started raiding Social Security. The American Welfare State was born and it costs money.

    Is the money spent well no, dose it go to people who really need it no, do they care no. This is going to get worse I’ve seen several examples of the Feds becoming more aggressive in getting money from people. The next scam will be VAT they’ll keep the income tax but they’ll exempt say people making over say 100k gradually that will be lowered until everybody is paying VAT and Income tax. Bastards

  • David

    Ok great — 5 of 6 households won’t be affected by this tax. But that’s not the point. That’s like praising a kitchen fire, for not burning the bathroom! Seriously – wrong importance!

    Yes, abolishing this rule would result in increased deficit; but this is only a problem because our congress is using this great big shiny credit card called “Federal Reserve,” and the balance keeps going higher and higher and higher!

  • JJ

    When will governments learn that high (or unfair) taxation discourages productivity?

    When they read ‘Atlas Shrugged”??? Or when there’s no more to get from us.

  • JJ

    Answer: the tax revenue simply won’t be there. So get ready to live in a poor, violent, dangerous, unstable Third World hellhole with a crappy infrastructure, dirt roads, unsafe drinking water, rat infestations and violent crime galore. Hmmm, maybe it wasn’t such a good idea for neocon globalist bastards to kill off the American middle class, now was it?

    El Pollo de Oro ….Not only that, but who’s gonna buy those 4 wheelers, campers, innovative appliances, and crap they manufacture for the middle class??

  • JJ

    I read a great statement …

    Fighting wars for peace is like ********** to get your virginity back.

  • El Pollo de Oro

    JJ: Exactly right. When the middle class become the neo-poor, their buying habits change. No more iPods, no more flat-screen TVs, no more fancy designer clothes, no more gigantic SUVs, no more eating out in nice Italian restaurants—just ramen at the dollar store. But in some cases, the BRA’s neo-poor will get their iPods the way that algunos tipos in Mexico City’s infamous Tepito neighborhood get them: they’ll resort to armed robbery, mugging and kidnapping. Or as they say to tourists who have the misfortune of wandering into El Barrio Bravo de Tepito by mistake: “Esto es un asalto, cabrón; quiero todo tu dinero porque necesito comprar un iPod nuevo. Ándale, guay!”

  • Zack

    At some point the lifters are just going to give up on supporting the leaners. Why should I work 60 hours a week so that the government can steal my wealth and hand it to Goldman Sachs and their other cronies?

    We help Americans find jobs and prosperity in Asia. Visit http://www.pathtoasia.com for details.

  • Dale

    What a blatant oversimplification to scare people who don’t know any better!

    First of all, they still have 2.5 months to pass a fix.

    Second, an “average” of $3900 for people earning $100,000 to $500,000 a year could mean $0 for those at the bottom and $7800 for those at the top.

    Third, did I mention they still have 2.5 months to pass a temporary fix?

    You’re just scaremongering. They passed the fix last year, they’ll pass it again this year.

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