The AMT or Alternative Minimum Tax is that rare thing – a part of the tax code that most people agree on irrespective of their ideological or political leanings. It was originally established in order to make certain that the richest citizens in the US were going to be made to pay their own fair share of the national tax revenues, but most people now think that it is unfair it has not been adjusted along with inflation which in effect means that an ever growing percentage of not quite as wealthy Americans are falling within its remit and finding themselves the recipients of bigger tax bills.
In recent negotiations on the debt ceiling, one of the considerations under discussion was that Congress remove the Alternative Minimum Tax. Whether this was a bargaining chip or a genuine suggestion is uncertain but it does rile many people that a tax that was put in place to place extra tax on the rich has now ended up including 65% of all US taxpayers. How is it fair that 65% of all taxpayers are required to pay an extra tax over and above what the rate charts require? On the other hand, some people might suggest that 65% of all taxpayers are now wealthy and that the gap between rich and poor is growing.
Certainly most people agree that something needs to be done. Whilst the gang of six in Washington managed to avoid handling the thorny issue of the AMT there are calls for action to be taken almost every year and the continuing back and forth debate as well as those regular year on year fixes have gotten to be too much.
Alex is a freelance journalist and financial blogger. He loves to write about baseball and jazz but spends most of his days writing about mortgages, credit cards and umbrella companies .
Washington’s most recent energy subsidy debates are focused on tax credits for industries involving natural gas and ethanol. The credit will expire at the end of this year, still the Senate voted to remove the subsidy. Thus the opposition to the $6 billion tax credit is increasing on a national level. Some Members of Congress have removed their names from the list of co-sponsors of the bill. In spite of this, bipartisan support is focused on extending the subsidies for the use of natural gas vehicles.
To see why none of these two industries deserve subsidies we can look at John Sullivan’s statement about this matter. He said that the natural gas industry will be fine without these subsidies, but the ethanol industry will not survive. Many argue that ethanol is not worth propping up by tax credit government intervention.
If something is not competitive in economical terms, then the state should not artificially encourage these technologies. It is not normal for a market to not be able to exist without subsidies, especially when there are alternatives. If the producers say their idea is viable, then they shouldn’t need tax credits anyway.
The argument turns to helping these producers to overcome the investment “valley of death”. They might say that they need tax credits in order to push through the initial hurdles of the transition from vehicles that run on gas to ones that are natural gas-powered. However, if natural gas is a good solution, then car manufacturers will implement it.
Preferential treatment to some industries has always been done through energy tax expenditures. These credits fool people into the perception that some technologies are more competitive than they really are.
Everyone now days wants to make money from home so they can spend more time with their kids. It seems the Internet is on everyone’s mind as the best way to accomplish that and it is indeed probably the best way. However, have you ever considered what it might mean for you tax wise if you are successful in starting your own home business?
Most people who start out to make some extra money online only make small amounts by maybe going to one of the surveys for money websites. They make $50 to $100 or less and then give up. But what if you are one of the ones who does break through and is successful at becoming self employed on the Internet?
The first thing that will happen is that you will have to pay both ends of the Social Security tax. If you are working for a company right now, they pay one half of the SS tax. But once you go out on your own you will be responsible for all 15.3% which is double what you are paying now. And as with all things having to do with the IRS, there is no way around it.
There might be other state taxes that you owe depending where you live. Washington and Ohio have a B&O tax which will take another 1.5% out of your pocket. It might also be a good idea to form an LLC or some other corporate entity for tax reasons and to protect yourself from liability.
All in all, working from home is a great idea that many people would like to be able to accomplish. However, few of them think about all the things that may will happen when you become a sole proprietorship and work for yourself. Like all things in life, there are both good aspects and bad aspects of becoming successful on your own.