Extend and Index the 2007 Alternative Minimum Tax Patch

Promise Honored President Obama is keeping the following promise:

"Extend and index the temporary fix to the Alternative Minimum Tax that was passed in 2007." — Obama campaign interviews with the Tax Policy Center

Source: http://www.taxpolicycenter.org/UploadedPDF/411749_updated_candidates.pdf

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UPDATES:

Updated: February 17, 2009

Alternative Minimum Tax patch is in the stimulus bill

During the presidential campaign, Barack Obama and Republican nominee John McCain promised they would extend and index for inflation a "patch" to fix the Alternative Minimum Tax.

Commonly called the AMT, it is a separate income tax that was intended to ensure that wealthy people did not use loopholes to avoid paying taxes. If you reach a certain minimum income level, you have to pay this tax regardless of your deductions and exemptions.

The trouble is that the AMT, unlike the standard system, is not indexed for inflation. More and more people have hit the threshold, and when they do they end up paying higher taxes. Increasingly, the AMT is becoming a burden for the middle class.

Resolving the issue permanently will be expensive and increase the federal deficit. To avoid that, Congress has been finding money every year to "patch" the AMT and exempt middle-income tax payers from its reach.

During the campaign, both Obama and McCain said they would continue to patch the AMT so that middle-income people would not have to pay it.

During negotiations on the bill that would become The American Recovery and Reinvestment Act of 2009, the AMT patch was added in the Senate, where the bill needed Republican support to overcome a threat of filibuster. (Three Republican senators ultimately joined Democrats in voting for the bill.)

The AMT patch may not have been as high-profile as some of Obama's other promises, but he made the pledge, and it was in the bill.

Sources:

Library of Congress, The American Recovery and Reinvestment Act of 2009, Feb. 17, 2009


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