You might think Republicans would make AMT reform a top priority, given their rhetoric, because the tax is profoundly anti-family. "A striking fact is that married couples are more than six times as likely to be on the AMT as singles," the study found.
This is primarily because of the treatment of personal exemptions. But the AMT also whacks blue states with its disallowance of state and local tax deductions.
And "combining risk factors," the study said, "virtually all (94 percent) of married couples with two or more children and [adjusted gross income] between $75,000 and $100,000 will be on the AMT in 2010."
Reform is not impossible. The Tax Policy Center experts -- Leonard E. Burman and William G. Gale of Brookings, and Mathew Hall, Jeffrey Rohaly and Mohammed Adeel Saleem of the Urban Institute -- suggest a number of possible solutions. Some would replace more than all of the lost revenue, possibly reducing the budget deficit.
But fixing the AMT without busting the budget is going to require something that will look to some people like an out-in-the-open tax increase, and those haven't been very popular lately.
Some readers may remember Vernice B. Kuglin, the FedEx pilot who was acquitted of tax evasion and other charges last year after a Memphis jury apparently bought her argument that the Internal Revenue Service couldn't show her where the law said she actually had to pay.
"I've been asking the IRS that question for 10 years," she said in a television interview after the verdict. "What section of the Internal Revenue Code makes me liable for the individual income tax? And what law requires me to file the Form 1040 form? And for 10 years I have not gotten a response to that particular question."
Well, this month, the U.S. Tax Court gave her an answer. It ordered her, pursuant to an agreement she reached with the IRS, to pay $296,362 in back taxes and $200,104 in penalties, for a total of $496,466.
The IRS again is giving relief to taxpayers hit by Hurricane Frances and extending the relief already given to those in the path of Bonnie and Charley. In an announcement Friday, the agency said taxpayers in either disaster area generally will have until Dec. 30, the day before the New Year's Day observance, to file tax returns and submit tax payments. The IRS will abate interest and any late-filing or late-payment penalties that would apply.
