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D.C. Finalizing Plan for Assault on Metro NYC
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Bloomberg has a story today that has special meaning for me (Link):
Background
- The USA has a tax that very few pay. It is called the AMT (Alternative Minimum Tax).
- AMT became law in 1969 when it was (shockingly) revealed that (get this):
155 people earned more than $200,000 and legally didn’t pay any taxes.
What is it today? 15Mn?
- AMT (functionally) eliminates most tax deductions (the mortgage deduction is excluded).
- AMT is not linked to inflation. As a result, the threshold for being subject to this tax has fallen every year.
- If applied to all taxpayer today, the AMT would clobber the middle class. It would change the way charities and churches are funded. It would discourage people from having children. It would discourage home ownership. It would crush people who live in states where there is an income tax.
-Congress is well aware of the problems with AMT. Every year for the last ten they have rolled over a "patch". The yearly exemption reads (sort of):
If you didn’t pay AMT last year, you don’t have to pay this year either! Vote for us early and often!
The language from Congress could also be read:
If you were unlucky enough to have been socked with AMT last year, we’re going to stick it to you again. Sucker!
Note: I’m one of the suckers. I’ve been paying this for the last 15 years. It has added up to big bucks.
Consider the Fiscal Cliff as a Wordle:
AMT sticks out. It is the basis upon which some compromise could be reached to avoid the most significant consequences of falling off of that cliff. A few examples of why AMT could become negotiating bait.
-If applied as the law is now written, AMT would raise a ton of revenue ($1Trillion++ over ten years). But politicians could say that “they” did not “raise” taxes, or create “new” taxes.
-The cost of AMT rises with income. It is a “progressive” tax. Democrats like that.
-Republicans want to broaden the base. AMT accomplishes that as well.
-Everyone wants to eliminate deductions (a stealth tax increase). AMT most certainly accomplishes that.
-AMT minimizes petty fraud of the IRS.
Note: How many people create an extra thousand or two of deductions out of thin air every year? Answer: Many. The IRS has no resources to find out. But with AMT, there are no deductions at all. Problem solved.
So who is going to get hit with AMT? A lot of folks is the answer. In 2010 only 4.4 Mn souls got hit with AMT. If Congress does not vote on another patch, that number will jump to 33Mn in 2013 (750% increase!).
Bye bye child deduction. You can’t deduct those charitable contribution you make. But by far the worst hit comes from the loss of deductions for local property taxes and income taxes paid to the state. The question of who will get hit the worst narrows down to the states that have high income taxes and also ridiculously high property taxes. Numbers 1, 2 and 3 on D.C.'s target list:
New York
Connecticut
New Jersey
The Big Apple is in the middle, and will suffer the most. Not only do NYers pay their state 8%, but they have to kick in another 2% for the privilege of living in town. Very big money is involved. All of these deductions could be lost on New Year’s Eve. Ten million people in Metro NY could get hit. It would be like Congress dropping stink bombs on Times Square.
Note. I absolutely promise that you come to hate the AMT. It will cost you, but worse, it will influence your decisions as to where you live, how much you give, how you invest, whether you should have a child and a whole bunch of other things. Oh, and you can forget about inventing those charitable expenses every year (and sweating an audit).
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#1 I could care less about Northeasterners getting fucked by the tax system because you vote for these scumbags and then whine when they turn you around and fuck you in the ass. I'm not just talking about the inner-city crack heads that are voting for more welfare, but educated banksters like Bruce that pay $35K per plate for liberal fund raisers to re-elect these fuckers. For real, water is wet.
#2 Why does the flat tax continue to go now where? It's been talked about for 30 years now, at least from what I can remember growing up in Florida. Why doesn't anyone support it? The socialists douchebags complain that it isn't regressive enough, but a flat 20% - 25% effective rate seems a lot better than a 35% statutory rate and 15% effective rate. Oh yeah, sorry lazy poor people and illegals, no more -10% effective rate for you. You want big fucking government, you pay for it.
paraphrase from another ZH poster:
if corporations are people tax them as individuals and let them pay the AMT....................
that works for me but can you imagine the screams of pain and outrage from mittens and the crime cartel................
"if corporations' are pe'ople ...... " Then the people in them pay tax on corporate earnings as well as tax paid on personal earnings.
If you think Obama receives any less from corporation you are truly a complete idiot.
Saw the AMT coming from a mile away. Could have been addressed a decade ago. Fiscal cliff, AMT and higher taxes are here. Push has come to shove and Uncle Sam needs cash money. You say 'It will hurt the real economy?' They say 'Fuck you, pay up."
Fuck Uncle Sam and fuck AMT. Downsize your life. Liquidate your assets and put them out of reach while you still can. Apply for assistance and EBS. Become a burden instead of their bitch.
You nailed it brother.
Going Galt Bitchez!
They oughta lose the deductions....
Why should I, living it a low tax state, subsidize federal tax collections and pay more, than those that choose to live in high tax states?
Hell, I am subsidizing their damn Federal Taxes.
What's right about that?
It's starting to sound a lot like Europe on here...
Those three states are losing population because of taxes currently paid. I'm retired but would lose $22,000 in property tax deductions. The State and Federal taxes would destroy me. Would I move? You betcha!
What about Cali ... I pay 11% state income and large property tax and 8+% sales tax ... NY in no match for Cali
At some point, don't you have to question why you live there?
EVERY FUCKIN' DAY...but then I see the weather in other places. Plus the retreat is far enough out that shots won't be noticed.
"RETREAT"?
You must be a "preper." (Rhymes with pepper - a little goes a long way and must be used judiciously.)
You haven't figured it out yet. You don't buy a retreat. You buy a HOME with your "retreat" requirements present, and MOVE to it.
Both covered. The retreat is a larger gathering point and it IS a home.
But EVERYBODY in CA is a liberal and they don't mind big taxes and redistribution-ism.
Commie see commie do
Non-socialists should MOOOOOOOve out! Let the State figure out how to raise taxes on all those welfare recipients without having productive citizens around - 'cause they moooooved out.
According to Wikipedia:
For taxpayers who owe AMT, charitable deductions and home mortgage interest (but not "hard money" refinancing interest) are especially valuable. They reduce tax liability by the full TMT effective marginal rate of 32.5% or 35% (for those in the AMT exemption phase-out range)[72] plus the full state income tax marginal rate.[73] This may be quite a bit better than under the regular tax.[
Could it be that BK doesn't make many charitable contributions and hence is unfamiliar with how AMT treats them?
Some States also have deduction multiples for:
CERTAIN contributions,
and some for contributions in CERTAIN areas/neighborhoods
and for CERTAIN investments. (And some investments are completely tax free!!! Too bad they don't pay anything anymore.)
One year I saw a bill passed in congress and signed into the Tax Code that was supposed to provide jobs for indians who live on "the Rez" - but the requirements that had to be met to take the indian employment deduction were so strict and complicated, I doubted that anyone in the country could qualify for it... except for maybe... oh... ONE congressman's brother-in-law... maybe...
And one year (one year ONLY) there was a deduction for "certain" art donations to CERTAIN types of institutions...
But perhaps you could still qualify for the "Whaling Captain's expenses" deduction?
all your money comes from us.
you're lucky we let you keep any at all.
hugs,
tptb
Bruce, in case you missed this interview earlier today on Bloomberg with Tom Keene. Think you will enjoy it.
Chris Whalen & Jonathan Weil On 'State Of The Banks, Questionable Mortgage Accounting At Wells Fargo'Move to Texas, and have a pied-a-terre in Vancouver WA for the TX summers.
Bad idea. Texas is horrible.
Please, stay home.
:/
And, by the way, Vancouver is soooo not in the States. Jus' sayin'.
By the by the way, looks like a good time to sell EURUSD. I know it's counterintuitive but that's the real "new normal." Target 1.226.
:D
That's Vancouver, Washington. You know, just across the Columbia River from Portland, OR.....
Never heard of it.
There's a Versailles, Kentucky, too, but I don't think Louis ever hung out there.
So the places where all the financial fraudsters operate out of and siphon the rest of the country's money to would be hit the hardest. Sounds good to me.
Congress is passing a 6 month CR. Thus, there is no need for them to return for a lame duck session, and they won't. Any dislocations from AMT, fiscal cliffs, sequestration, whatever can be retroactively fixed next year before he CR runs out April 1. They may or may not fix any of these things. Who knows.
All I can do is quote Scott Lucas' "California Songs": And fuck New York too.
New Yorkers (all East Coasters in fact) are always walking around chest out about how goddamn hard they are, until it's too cold or too hot or taxes are too high. Move to Canada, mule whining bitches.
Please stay home.
Canada also is too cold or too hot and all of our mules have very big antlers.
Now just think of all those poor sods who make less than 100K per year and have to pay... gasp... 6% of income to Social Security and Medicare / Medicaid (an AMT on them). How many stink-bombs have been dropped on that group of people since 1969, you think?
Lower the AMT rate to 15% and 25% and boom! tax simplification, essentially a one page form. Throw out the other 90,000 pages.
But those programs will be there for us when we get old, right? Right?!?
Since corporations are now people, we should tax them like people paying the (AMT) Alternative Minimum Tax.
i believe corporations are in fact people
and i support the DEATH PENALTY
It exists, the death penalty loving reatard guvner from Texas signed the death warrant for Arthur Anderson soon after his promotion to 1600 Penn.
There is an AMT for corporations too, except few trigger AMT ...
It's amazing how many taxes etc aren't adjusted for inflation or relevance ... originally AMT targeted a few hundred families, but now many of my friends (23-27) are paying AMT