Normally, I confine this column to all things technical. This time I feel compelled to deviate... The current budget crisis has me outraged.
At this writing, President Barack Obama and House Speaker John Boehner continue efforts to hammer out a compromise that will avoid nearly $500 billion in automatic tax hikes and spending cuts at year's end. We are told this is the “fiscal cliff” our government is heading over if no fix is implemented before December 31.
Actually, it is not really our government that is heading toward a fiscal cliff - it is us!
If our leaders cannot come up with a solution to the budget crisis, the Alternative Minimum Tax will take effect for just about the entire middle class. Under the AMT, many of the usual deductions and exemptions suddenly evaporate.
Even though some deductions will still stand under the AMT, including those for mortgage-interest and charitable donations, some hefty breaks are denied under the AMT, including state and local income taxes and property taxes, child-tax credits, and home-equity loan interest.
Forget about a refund - we will be forced to dig deep into our pockets for money that may not be there. That means interest and penalties if the money is not paid to the IRS on time. Not only will this fiasco cost the average taxpayer about $3,700, it will have devastating effects that will ripple through our already sputtering economy. And once implemented, the AMT is not reversible. It just goes down as a big “whoops”.
When House and Senate representatives arrive home for Christmas without a solution in hand, ask them why they are here instead of doing their job in Washington. Get in their face about it... We pay them an exorbitant salary, provide them with a gold-plated retirement plan, and grant them the most envied healthcare package on earth. For all this, we have a right to expect something other than catastrophic failure.