Dems Admit Tax Scheme Was Wrong

The most recent tax battle is over, and Bush won again. This is something that hits everyone's pocketbook, so I want to dig into it a bit. Follow along with me.

First, let's address the Alternative Minimum Tax. When the AMT was first implemented around 40 years ago, it was intended to affect only the super-wealthy (at the time, only about 200 families in the whole United States) by establishing an alternative minimum tax amount that everyone had to pay even if they were able to shelter most of their income from taxation.

In their infinite (lack of) wisdom, Congress failed to account for inflation, so as time went on and as more Americans became more wealthy, the AMT started hitting more Americans because the AMT didn't grow with the income of American families. Congress let it go because it meant more money for them to throw around, and money means power. It was slimy, but that's Congress for you. Anyway, as of 2006, there would be 23 million families that would be paying the AMT, some earning as low as $50,000 per year! Basically, it was an outdated tax that was screwing middle-class America right alongside the rich (except the rich could afford to pay it easily, even if they didn't like it).

Everyone knew the AMT was unfair and outdated, so everyone knew it needed to be scrapped, or at the very least, fixed. The catch was that by eliminating the AMT, the government would take in about $50 billion less each year. The Democrats, of course, just can't stand watching income remain in your pocket (where it belongs), so they had pledged to recover the 'lost' $50 billion by adding new taxes.

Republicans in the Senate, led by a staunch Bush administration, stood firm against it, and the Senate passed a bill (88-5) last week that temporarily fixed the AMT (at least for the current year) without recovering the 'lost' money. The key here is that passing this bill signals that the tax platform that Democrat leaders in Congress have been pushing for years (called 'Pay-go', or pay-as-you-go) was scrapped, essentially an admission that it wasn't actually good for America. Incidentally, neither Hillary Clinton nor Barack Obama voted on this bill, so that means they can still take both sides of the issue.

Anyway, it's good to see the Republicans finally starting to stand up for fiscal responsibility - they had kind of fallen off that map over the past few years, and the explosion of government was the result. If at least one party is acting responsibly, that is great news for the American taxpayer.

So, that's the political aspect of this...now, how does it affect you? Well, if you're anywhere on the upper side of the middle class (or if you're striving to get there), you could have been hit by the AMT. Of those 23 million people paying it, the average amount was $2,000. That's right - an extra $2,000 in taxes, simply because Congress is greedy!

This is why these things matter, people! If you don't pay attention, you will get fleeced over and over and over again. The key thing to remember is which party stood up for you (Republican), and which party fought to take an extra $2,000 out of your pocket (Democrat). The Democrats have pledged to heap tax after tax after tax on YOU if they take the White House in 2008. Do you really want to let that happen? The choice is yours.

There's my two cents.