Yeah, I'm talking to you, Mr. Wall Street guy who makes $350,000. You too, Ms. Big Firm associate lawyer who makes $200,000, the same as her middle management husband. And you, also too, Mr. Gastroenterologist who rakes in $300-500,000 doing five or six colonoscopies a day.
You probably live in NY or NJ or CA or IL or maybe FL. You're one of those people who likes to say "I'm liberal on social issues but conservative on economic issues." You're thinking of voting for Romney. Maybe because you're deeply offended and hurt by Obama's mild criticism of bankers or the wealthiest. Maybe because you think that Romney is "just kidding" about Planned Parenthood and gays.
Maybe because you like the Bush tax cuts.
Stop right there, because if that's the reason, you are a bigger sucker, at least dollar-wise, than the Wisconsin union worker who voted for Scott Walker.
For the past 10 years, you've essentially been giving away $20,000 or more a year to the Koch Brothers, Warren Buffett, Lebron James, Donald Trump and a cast of hundreds.
It's because of three letters: "AMT" -- the Alternative Minimum Tax.
Instead of watching Morning Joe, any Sunday show, CNN or reading the Wall Street Journal or even the NY Times, try listening to someone who knows what he's talking about.
Like David Cay Johnston, former Times tax writer:
The design of the Bush tax cuts made sure that the very rich, those making $1 million or more per year, got nearly the full measure of the cuts that candidate Bush promised. Not so those making less. To hold the cost of the tax cuts to 1.3 trillion over the first ten years, someone had to lose out. The administration could have decided to cut the top rate of 39.6 percent to 36 percent instead of 35 percent, for example. It could have revised the alternative minimum tax to make it fall more heavily on the very rich so that those making less than $1 million or $500,000 could be exempted. Instead, the administration relied on the stealth approach of letting the alternative tax silently take back from those making less than $500,000 a year some or all of what they were told to expect. This design meant that the upper middle class, families making $75,000 to $500,000, would subsidize the tax cuts for those in the million-dollar-and-up income class.
So Mr. or Ms. bottom of the one percent, take a look at your tax returns instead of just signing them and returning them to your accountant. What do you see?
Let's say your family's Adjusted Gross Income is about $350,000 (by some measures toward the low end of the one percent). But you live in one of those states like NY or CA and have exemptions and itemized deductions (state taxes, mortgage interest) of about $70,000. Now you're down to taxable income of about $280,000, and you pay tax of about $65,000 based on the Bush tax brackets.
OK. Not too bad. And you already paid most of it by paying withholding tax and estimated tax payments already!. You think, "hey, I did benefit from Bush's tax cuts!"
But wait! Line 45 says you've got to fill out Form 6251, "Alternative Minimum Tax -- Individuals." That says you've got to take your taxable income of $280,000 and add back about $30,000 of those nice deductions for state and local taxes, etc. So now your AMT taxable income is about $310,000.
Not good. But look at line 31 on Form 6251. It says you pay only 28% of that higher taxable income. That's good, isn't it? Isn't it lower than the rate at the high brackets that I paid on the (non-AMT) lower taxable income. Won't it come out to less than my regular taxes?
[Buzzer sounds]: Oh, I'm so sorry. Your tax comes out to about $85,000, $20,000 more than the regular tax -- for two reasons:
First, for your regular tax, you're not paying the Bush top bracket rate rate (33 or 35%) on all your income, just on the highest brackets. It's actually about 24% averaging all brackets.
Second, the 28% AMT tax is applied to a higher taxable amount than the regular tax (i.e., without the nice deductions).
So your AMT tax comes out to about $85,000. And the law says you've got to pay the higher of the "regular" tax and the AMT. In this case about a $20,000 difference.
So, Mr. or Ms. social liberal/economic conservative. Those economic conservatives have been screwing you for ten years. Taking your $20,000 a year more to finance the difference between their 35% and 39% upper bracket, or even worse, their 15% capital gains rate.
It's time to wise up. The Republican policies are bad for you and everyone except for the Trumps and Koch's laughing down at you from the 0.1%