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How the Alternative Minimum Tax Works

        Money | Taxes

Author's Note

One of the perks of writing a series of tax-related articles for HowStuffWorks is that it gives me some fact-based insight into the political battles in Washington, D.C. As the President and Congress search for ways to shore up the U.S. economy in the face of a global recession, there have been bitterly divisive battles over questions of spending, taxes and budgetary priorities. The Alternative Minimum Tax is widely despised by lawmakers, but has avoided any real reform because it collects so much tax revenue for the federal government. As I write this, Congressional Republicans are proposing a sweeping tax overhaul that would eliminate the AMT. Meanwhile, Democrats are pushing for the Fair Share Tax, which would replace the AMT with the so-called Buffett Rule, which would tax a minimum of 30 percent on income above $1 million. I hope that this article gives you enough facts to intelligently listen to the debates on Capitol Hill and come to your own conclusions.

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Sources

  • Bischoff, Bill. SmartMoney. "The Alternative Minimum Tax." Feb. 3, 2012 (March 27, 2012.) http://www.smartmoney.com/taxes/income/the-alternative-minimum-tax-9540/
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  • Johnston, David Cay. The New York Times. "Funny, They Don't Look Like Fat Cats." January 10, 1999 (March 26, 2012.) http://www.nytimes.com/1999/01/10/business/funny-they-don-t-look-like-fat-cats.html?pagewanted=all&src=pm
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  • Stewart, James B. The New York Times. "Paying Far More Than 13.9%: A Taxpayer's Lament." January 27, 2012 (March 27, 2012.) http://www.nytimes.com/2012/01/28/business/a-personal-and-painful-tax-reality-common-sense.html?pagewanted=all
  • Tax Policy Center. "Alternative Minimum Tax" (March 28, 2012.) http://www.taxpolicycenter.org/taxtopics/AMT.cfm
  • Todorova, Aleksandra. SmartMoney. "Going to Extremes to Avoid the AMT." March 20, 2008 (March 27, 2012.) http://www.smartmoney.com/spend/family-money/going-to-extremes-to-avoid-the-amt-22747/?mod=obnetwork
  • TurboTax. "Alternative Minimum Tax: Common Questions" 2011 http://turbotax.intuit.com/tax-tools/tax-tips/IRS-Tax-Return/Alternative-Minimum-Tax--Common-Questions/INF12072.html

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