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A Lesson on Tax Deadline Day


Before you filed that income tax return, did you calculate your AMT liability? If you are asking what the AMT is right about now, you aren’t alone. AMT stands for Alternative Minimum Tax, and it was brought into being as a means to make sure that those with the highest incomes, the very wealthy, were paying their fair share of income taxes.

We here at the DCP are lucky to be able to speak with the finest minds on a plethora of subjects. Recently, I was lucky enough to speak with Richard Parker, author of JOHN KENNETH GALBRAITH, His Life, His Politics, His Economics.

www.johnkennethgalbraith.com

Richard Parker was educated at Oxford, and is a senior fellow of the Shorenstein Center at Harvard’s Kennedy School of Government. He is a co-found of Mother Jones, and writes extensively on economics and public policy.

With help from Mr. Parker, I present to you the AMT for the Little Guy.

Back in 1970 about 19,000 households were required to pay the AMT. In 2003 that number had risen to 2.4 million. In 2005 it is estimated that 17% of households with incomes of $75-$100K will be in the AMT tax bracket. How can that be, if this tax was meant for the very wealthy? Take a look at your deductions. Do you pay high state and local taxes that you deduct? Mortgage interest? Do you take the standard deduction? If all the deductions you take reduce your taxes too much, and your tax burden is deemed too low, you must pay the AMT, and those deductions are taken away from you. Right now, the only way to know if the AMT applies to you is to do your taxes the regular way, and also use the AMT schedule. Whichever is the higher tax, that is the one you will pay.

Feeling wealthy yet?

The AMT was meant to close loopholes, and end tax shelters that the very rich used in order to lower their tax burden below what us average folks were paying. The problem is, the AMT has not been indexed for cost of living or inflation annually as other tax laws were changed. Deductions have gone up, but the AMT does not take into account that your ‘large’ deductions are based on current economics. Left alone, 52% of households with incomes of $75K will pay the AMT by 2010.

Wondering where the outrage is yet?

Right now the very wealthiest of Americans do pay the AMT. From the one or two percent of the past, to about four percent right now, the AMT does close what are known as ‘preferences’ on the very wealthiest of Americans, but those super wealthy people are not much burdened by large income taxes, when you think about all the other sources of wealth that have enjoyed some very generous tax cuts. Sources to reduce a tax burden that you and I do not enjoy.

Mr. Parker explained to me that the AMT needs to be adjusted. Change the income threshold and the little guy would be shielded from the AMT. The President is still on the great S.S. ‘crisis’ tour; the AMT waits. It is thought that Republicans would prefer to repeal the AMT altogether. That would save the little guy, right? Don’t bet your sweet W-2 on it. Repealing the AMT would open up long closed tax shelters for the rich, but provide nothing for the poorest wage earners. Without a tax increase to offset the AMT taxes, the deficit would continue to soar.

Are you still wondering why you haven’t heard more about the AMT? Mr. Parker advises us to bide our time. Get educated about the AMT. When the majority begins to make noise about the AMT, or amending the tax code, the information has to be out there about just how much of another ‘non-tax cut’ this is. Find out about tax shelters you will never enjoy. On Mr. Parker’s advice I visited Citizens for Tax Justice.

http://www.ctj.org/

The AMT was not meant for us little guys. Repealing it will not help us, even though the disinformation about it doing just that is sure to fly. It is too late to help anyone who finds himself paying the AMT for tax year 2004. Read this alert, as a beginning.

http://www.congress.org/congressorg/issues/alert/?alertid=7379356&content_dir=ua_congressorg

Eye opening information is out there. House bill H.R. 25, introduced by John Linder (R) Georgia has 32 current Republican sponsors. This bill would introduce the administration's preference for a flat tax. Notice it does not address the AMT. Senate bill S. 25 is the identical bill to be sponsored by Saxby Chambliss (R) also Georgia.

Richard Parker took the time to give us an overview. An overview will not be enough when the AMT and the tax code come to the floor. We have talked about backdoor tax increases in the past. Taxes in the near future may go well beyond that. The golden drawbridge is going to be raised to protect the wealthy in their castles, and many of us may not have our back doors to walk through unless we are prepared to counter the next great 'mandate.' It’s April 15th. Are you ready to be educated yet?

20 Comments

Karen said:

And this just in from John Edwards: (Karen--you are so IN THE MODE!)

Yesterday, at the New School in New York, I am joining a group of leaders from around the country to discuss the issues of fairness in America. To me, there is no place where fairness is more at risk today than in America's tax code.

The reason I started talking about two Americas is that this administration wants our great country to run off two sets of books: one for those at the top who get all the breaks, and one for the rest of you who do all the work. That's wrong. If we're going to be one America, not two, we must have one tax code, not two.

Not only is the current system already stacked against working Americans, but our opponents want to make it even worse. Our opponents want to shift the tax burden from unearned income straight on to the backs of working people. They want to give the wealthy more favors and call it reform, and they want working people to foot the bill. This radical notion turns on its head the very values that built America - rewarding hard work.

This is the time to stand up for the great American value: work. This is the time to say that a stockbroker should never pay a lower tax rate on wealth than a secretary pays on work. This is the time to say that the wealthy and powerful shouldn't have access to special shelters and loopholes that regular people can't use. And this is the time to say that we want a tax code that rewards everyone's work to build everyone's wealth.

We must take away the biggest shelter in the current tax code: the fact that the very wealthiest are able to shelter capital gains and dividends from the Alternative Minimum Tax. The very purpose of the AMT is to make sure the very wealthy pay their fair share and leave the middle class alone. But thanks to this administration, the AMT is doing exactly the opposite. It is increasingly hitting middle class families all over the country. President Bush likes to talk about himself as a tax-cutter, but the truth is that the AMT is a big tax-raiser on many middle-class families.

At the same time, the AMT is not taxing many of the multimillionaires it was meant to tax. Why? Because the wealthy have the sweetest shelter in the business: their capital gains and dividends get special breaks from the regular rate in the AMT.

Doing away with tax shelters for multimillionaires is just the beginning. We have to also make it easier for working middle class families to pay their taxes, and I present some ideas for making filing your taxes and saving for the future easier to do in the full the text of my speech, which you can read here. I hope you will read it, and let me know what you think by visiting my blog to continue the conversation.

Your friend,

John

battlebob said:

Tax Waste, not work..

http://www.tompaine.com/articles/tax_waste_not_work.php?dateid=20050415

[snip]
As a society, we hold up the virtue of personal responsibility as a model of personal behavior. Levying taxes on pollution and resource extraction would send a clear, common-sense message: If you make a mess, you have to clean it up. Instead, polluters foul our air and water for free, while the tax code has a tangled web of special subsidies that reward energy companies for digging holes in the ground.

Toolmaker said:


People wonder what the difference is between the GOP and DEMO parties...the Tax structure is the largest difference that can be quantifiably defined.

Should taxes be generated from parents working hard to put food on their table?, or from wealthy families that use trusts and foundations to shelter their income?
Should tax credits be generated from simply moving money from one column to another, or should College tuition and health care costs take precedance?
Do people know for every tax deduction taken away from them(credit card interest), it is given to the wealthy (Capital gains cuts)

When americans realize they are supporting the wealthy with their pocktbooks as well as their votes, they will vote Democrats to level the playing field.

We should be teaching people to understand the tax shelter game a lot better than has been explained.

Veritas said:

Take this for what it's worth, but...

As a volunteer helping many people file returns this year, I learned that if only I were a single parent earning below the poverty line, I would get thousands of dollars back in federal and state taxes. Thousands of dollars that I never paid. This is due to the two child tax credits per child (including refundable credits, which you receive even if you did not have any tax deducted) and the earned income credit. Of course, that individual would also be receiving food stamps and welfare.

Would life be easy for that individual? of course not, but as a single person with no children, having taken a large pay cut to enter the military, I have to pay quite a large chunk in taxes in order to subsidize yes...the wealthy...but also those such as I mentioned above. What values are we supporting by our tax code?

I also have to take issue with the demonization of earnings via dividends, interest, stocks, options, etc. You don't have to have millions in order to make money from these investment vehicles. Why is all non-"earned" money bad? Why not just tighten the controls on the vast salaries and bonuses paid to CEOs, perhaps by indexing them to the salaries of those companies' hourly workers? And FYI, one way to implement such a change is by being a stockholder of said company...

battlebob said:

Tom DeLay's house of scandal..

http://houseofscandal.org/

battlebob said:

William Lind on Iraq strategy...

http://www.d-n-i.net/lind/lind_4_15_05.htm

[snip]
An administration that has made “loyalty” to the White House’s maximalist objectives its most important test is not likely to encourage consideration of alternative strategies.

Note:
Col. John Boyd is generally considered the author of 4th generation warfare strategy..

sparrow said:

President's Tax Return Conclusive Proof That Economic Conservatism Is a Lie, G.O.P. Dogma on Taxation Is a Farce
By ADVOCATE STAFF

Ever listened to conservative radio?

Then you know that "the government" takes 50% of your annual income in taxes every April 15th.

Indeed, you'd be hard pressed to find a Republican in the national media who claims to--or, rather, admits to--be paying anything less than half his or her yearly draw to the feds.

Except, that is, the President--the leader of the National Republican Party--who's never paid anything like half his income in taxes, giving the lie to conservative whining about the tax burden of (so say they) "the average American."

Want the details? Check here for all the proof you'll ever need that economic conservatism is a lie, and the G.O.P.'s perennially barked-out dogma on taxation is an absurdist farce.

This year, the President, one of the top 0.5% richest wage-earners in the United States, and a member of one of the richest families in the nation, paid 30.8% of his income in federal taxes.

Which must have appalled him.

For in 2004, he paid only 27.6% of his income to the government.


http://nashuaadvocate.blogspot.com/

AllyMcLesbian formerly SkinnyLawyer said:

Remember... FLAT TAX = REGRESSIVE TAX.

No other country on earth is even flirting with this nonsense of an idea. Just how pathetic have we become, people?

It just makes me want to move more. Sure, my new home will likely tax me at 50%. But at least they won't be crooks like Uncle Sam, and I will actually have healthcare.

AllyMcLesbian formerly SkinnyLawyer said:

Posted by: Veritas at April 15, 2005 04:21 PM

Bingo! The solution to our population growth problem. STOP SUBSIDIZING CHILDBEARING. (Better immigration policy is the other solution.) Plus, subsidizing welfare moms is something the pugs always accuse us of doing anyway (black welfare moms in Cadillacs, Reagan kept reminding us), so it's time we got responsible.

While we are at it, stop subsidizing irresponsible marriages as well... I am sick and tired of paying more in taxes just because I am single, so that the likes of Britney can get a tax break.

sparrow said:

Some election news:

http://www.washingtonspectator.com/articles/20050415voting_1.cfm

"PROBLEMS ELSEWHERE—A Democratic website has posted disparities between the margin of votes received by Kerry in New Mexico, and by other Democratic candidates, for local positions, including judgeships. Apparently every Democrat running in a surprising number of counties outperformed the top of the ticket, although usually a presidential candidate gets more votes than those in lesser races.

"Ohio presented the appearance of massive voter suppression and vote fraud. Along with widely reported irregularities, including excessively long lines at, and confusion about, the location of voting places, an article by Dr. Richard Hayes Phillips, "Stealing Votes in Columbus," documents how voting machines were taken away from high-population precincts, which were likely to go for Kerry, and sent to more affluent suburbs with their smaller populations, instead. Dr. Phillips has tabulated the difference voting machines made in the voting.

"The precincts with the longest lines, of course, turned away more voters. Phillips reports that the voting machines were disbursed by a former executive director of the Franklin County Republican Party, Matt Damschroder, who met with George W. Bush and with Ohio's Republican Secretary of State, Kenneth Blackwell, on Election Day.

"Phillips concludes that "Damschroder did not act alone" in Ohio. With 74 wards and 472 precincts in Columbus, one person could not have delivered all the voting machines, and probably could not have planned all the deliveries. "Anyone who associated with Mr. Damschroder on or shortly before Election Day should be investigated for possible complicity."

DiAnne said:

Why Bush Signed Off From Cyberspace (AP)

WASHINGTON (April 14) - President Bush said Thursday that the public should know as much as possible about government decision-making, but national security and personal privacy - including his - need to be protected.

''I believe in open government,'' Bush said at a meeting of the American Society of Newspaper Editors. ''I've always believed in open government. I don't e-mail, however. And there's a reason: I don't want you reading my personal stuff.''

Bush once was a prolific e-mailer. But he signed off from cyberspace just before taking office in 2001 after lawyers told him that his presidential e-mail communications would be subject to legal and archival requirements.

''There's got to be a certain sense of privacy,'' Bush said. ''You're entitled to how I make decisions and you're entitled to ask questions, which I answer. I don't think you're entitled to read my mail between my daughters and me.''

White House records are not subject to the Freedom of Information Act, which allows reporters and others to obtain unclassified government records that officials would not otherwise release.

Official presidential documents are subject to eventual release under the federal Presidential Records Act unless they are classified or otherwise exempt for reasons, including personal privacy.

Steve Aftergood, director of the Federation of American Scientists' Secrecy Project, said, ''Protecting the president's personal e-mail does not in any way justify the pattern of withholding that we've seen.''

Aftergood said classification activity is increasing, records are being withdrawn from government Web sites and access barriers are being put in place at reading rooms at federal agencies.

''Information which used to be easy to obtain is now difficult or impossible to get,'' he said. ''Trivial things such as the Pentagon phone directory have been marked for official use only and are no longer public.''

Claiming national security concerns, the Bush administration clamped down on declassification of government documents after the attacks of Sept. 11, 2001.

The trend toward keeping more government information secret began even before that and those who advocate for openness in government are worried that the freedom of U.S. citizens is eroding with every file they are not allowed to read.

Just a month after the terrorist attacks, the administration set a higher threshold for releasing information under the Freedom of Information Act.

Under the Clinton administration, federal agencies were urged to resolve disclosure decisions by releasing, not withholding, government information. In October 2001, however, former Attorney General John Ashcroft changed that policy.

In a memo, Ashcroft required federal agencies to carefully consider national security, law enforcement concerns and personal privacy before releasing information. Ashcroft reassured the agencies that the Justice Department would defend their decisions not to release any information there was a ''sound legal basis'' for withholding.

Bush said he knows there is ''tension'' about how the government decides what can be released without jeopardizing the fight against terrorism and that there's a ''suspicion'' his administration is too security-conscious.

He said he will review a Senate bill to create a 16-member panel that would recommend ways to speed FOIA requests, which can drag on for years.

''We look forward to analyzing and working with legislation that would help put a free press' mind at ease that you're not being denied information you shouldn't see,'' Bush told the editors.

''I will tell you, though, I am worried about things getting in the press that puts people's lives at risk. It's that judgment about what would put someone's life at risk and what doesn't is where there's tension,'' the president said.

Bush refused to discuss a high-profile case about a news column that disclosed the identity of CIA officer Valerie Plame. Her name was first published in a 2003 column by Robert Novak, who cited two unidentified senior administration officials as his sources.

The White House has been criticized for outing Plame's identity. Matthew Cooper of Time magazine and Judith Miller of the New York Times have refused to disclose their sources, which federal prosecutors say have stalled their case into who leaked the information.

Asked whether he thought the reporters were right not to reveal their sources, Bush said: ''You think I'm going there? You're crazy.''

DiAnne said:


White House Curbs Probe of Commentator's Hiring

Los Angeles Times

Some administration staffers were not allowed to be interviewed by investigators looking into Armstrong Williams' paid role.

Washington - Education Department investigators looking into the administration's controversial hiring of commentator Armstrong Williams were denied the opportunity to interview some White House personnel because of a White House claim that such interviews could breach long-standing legal traditions.

"By statute, an inspector general's jurisdiction is limited," White House spokeswoman Dana Perino said Thursday. "An IG can request information from other federal agencies but not from the White House office."

She said the White House did allow the investigators to interview one White House employee who had been on loan to the Education Department when Williams was hired. But it has not granted permission for other interviews.

The White House refusal came to light Thursday after Rep. George Miller (D-CA) said he was told about it by Inspector General Jack Higgins. Miller wrote to the White House asking that investigators have full access to White House personnel so they could get to the bottom of the hiring of Williams.

Williams, a television and newspaper commentator, received $240,000 in federal funds last year to promote the president's No Child Left Behind initiative. Williams did not disclose the payments made to him through a public relations firm hired by the Education Department, even as he appeared on television promoting the president's work.

After disclosure of Williams' contract in January, Higgins launched an inquiry that is nearly complete.

This week, Higgins and members of his staff briefed Miller and informed him that they had encountered two potential obstacles, Miller said in an interview.

The first was the White House refusal to allow investigators to interview all officials who may have had knowledge of the Williams contract. Second was that Secretary of Education Margaret Spellings was considering deleting part of a draft copy of the inspector general's report, which has not been released.

Asked about the assertion that Spellings intended to invoke a "deliberative process privilege" that would require Higgins to delete information from the report, Spellings' office issued a statement late Thursday saying she would release the inspector general's draft unedited.

"The inspector general will be releasing it as originally drafted with the secretary's full and complete support and cooperation," said department spokeswoman Susan Aspey.

Earlier in the day, Miller rejected the notion that the law should prevent White House staffers from cooperating. "The public's right to know is absolutely more important than any claim of privilege that the White House or the Department of Education might make," Miller said.

Perino said it was a matter of principle. She said permission was granted to interview a White House official about his time spent at the Eduction Department, but not to question officials who worked at the White House at the time Williams was hired and who have since moved to the Education Department.

That could include Spellings, who was the top domestic policy advisor at the White House during President Bush's first term and was named Education secretary Nov. 17.

"The courts have ruled in many contexts that the White House office is not a federal agency," Perino said. "A similar principle underlies the long-standing tradition of White House staff not testifying before Congress. We are declining as a matter of policy."

Higgins did not respond to a request for comment.

Constitutional law scholars said that the case law in this area was thin but that the White House could, at its discretion, permit current or former staff to be interviewed by the inspector general.

"At first blush, this strikes me as not in the zone of the law but in the zone of politics," said Goodwin Liu, a constitutional law expert at UC Berkeley's Boalt Hall School of Law.

An aide to Miller said the White House explanation "unmistakably leads you back to the question, 'Is there something the White House is trying to cover up or hide?' "

Miller asked Higgins to delay release of the report until the White House granted "Higgins' office the right to interview any current or former White House officials with information about the contract."

USA Today first disclosed the Williams contract in January. At the time, Democrats charged that taxpayer funds were being used to distribute Republican propaganda. The White House has consistently distanced itself from the decision to hire Williams, and Bush has criticized the decision. He did so again Thursday when he told a meeting of newspaper editors that the hiring of Williams "was wrong."

SORRY NO LINK - PEOPLE SEND ME THIS DEPRESSING SH*T ALL DAY WHILE I'M WORKING & NO INTERNET

DiAnne said:

Lakoff is coming to Seattle June 16 & 17.

oncall said:

"Justice Sunday" is will be a black Sunday. Is there an effort to make sure that any "Church" that shows that propaganda loses its tax exempt status? Is this what Bu$hco means by a faith based initiative?

oncall said:

Way off topic, but funny.

http://www.gophypocrites.com/2005/04/hyp05016.html

So Many Republican Hypocrites, So Little Time

Welcome back to the BuzzFlash.com GOP Hypocrite of the Week.


This is the first time we are bestowing our hypocrite of the week on a couple -- and in this case we don't even know both their names.


But any guy who would marry Arthur Finkelstein has got to be a hypocrite, because the love of his life has made a living off of doing pond scum political consulting for anti-gay GOP candidates.

DiAnne said:

I told my husband I was going to a Democratic retreat tomorrow & he said, "Why do the Democrats need a retreat? Haven't they retreated enough?"

DiAnne said:

I heard on NPR that Ayatollah Frist is going to speak by simulcast to a throng of American Taleban conservatives all over America, from a church in Kentucky - it has to do with "activist judges"

April said:

Posted by: DiAnne at April 16, 2005 12:24 AM

Alls I can say to that at 2 am is AMEN and the man speaks the truth!

sparrow said:

April,

You are one dedicated woman to be saving the world at 2:15 am!

DiAnne said:

Someone who used to live in South Dakota sent me an email that Schultz, the ND guy from Air America, is going to speak in Spearfish, SD.
Granted it's a college town (we met there when we were nurses aids on the graveyard shift) but it's a "red" state. Right on! I emailed them where it said "Contact us" and sent them our support from Portland and Seattle, as former South Dakotans. I also sent it to Mark, who is "Crew" on DCP & in SD.

We do need ALL FIFTY STATES.

I also had this wierd dream - I was trying to play Tetrus and the pieces automatically would only come down in the shape of a cross. I think it was because I was reading about Frist simulcasting from the megaChurch before going to bed. (That's like a Walmart only they pray to get rid of activist judges too).

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