to them. Instead of running your finances through a simple worksheet, you have to do your taxes twice. In one version, you prepare a normal tax return. In the other, you return the alternative minimum return. If you are snagged by the tax, you then pay whichever approach results in the government getting more of your money. Ah, the government at work.
Given the nightmare of the alternative minimum tax, why hasn’t it been repealed? Well, there is one basic reason. It now brings in massive tax revenues to the government. If repealed, the government would lose all that income. Considering the massive budgetary debt we already have, it is a difficult issue to say the least. One proposal is to do away with the tax and replace the lost revenue by raising other taxes. As you might imagine, taxpayers are very cool to this proposal.
Perhaps the most ironic thing is the alternative minimum tax may ultimately become the spur that kicks off a complete re-writing of the tax code. There is no simple way to address it given the way the current code is written. If it is going to be changed, the tax code as a whole probably is going to need to be tweaked. This will raise issues of how exactly we should be taxed as a society. Included in those discussions will be national sales tax and flat tax proposals. While the merits of those taxes are controversial, there is no doubt they would make filing taxes much easier.
The Alternative Minimum Tax is a nightmare. As it ensnares more and more people, it may ironically become the basis of major tax change in our country.
Article Source: http://www.Article-Warehouse.com
Richard A. Chapo is with BusinessTaxRecovery.com - information on federal income tax issues.
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