Stealth Tax ... Be Prepared

It was a little disconcerting reading this news update regarding the Stealth Tax, or in other words, the alternative minimum tax (AMT). Initially designed to limit deductions of the rich, it is quickly beginning to affect the middle class. Congress has no plans to make changes to this tax as it would be too costly ... but what effect will this have on the economy in the long run? The more the middle class has to spend in taxes, the less they will be spending in the market. Unfortunately, Congress rarely, if ever, looks anywhere beyond elections. So, as I'm guessing many of us may be in this tax bracket in five years or so (and especially for those families planning on several children), we'd best be aware and prepared for the possibility of this "Stealth Tax" affecting us.

1 comment:

Dr. Tufte said...

The AMT is a monster that Congress has no intention of fixing because it is a money-maker for them.

The biggest problem with the AMT is that it is not indexed for inflation. Therefore, increases in nominal income through inflation can push people into it.