Indiana Grain Company, LLC

Posted: 02/04/10

By: tomgrisafi

If not familiar, Alternative Minimum Tax was set forth to essentially assure that high income earners do not utilize special tax benefits to pay little or no tax.

AMT is basically just another tax system, like the "regular" system. Once you are at a certain income level, your taxes are calculated through both systems, and you pay whichever is the higher of the two.

We have all heard the old stories of the rich getting richer, and not having to pay their fair portion of taxes. In 1970, AMT became operative to prevent this.

President Obama's proposed budget for fiscal 2011 would increase taxes on single people making more than roughly $200,000 and married couples with more than about $250,000 in income.

Under the Obama proposal, the top two regular tax rates would go up, but the AMT would remain more or less unchanged. High-income people would see their regular taxes go up, but as long as their AMT is still higher, they would not be hurt by the increase in the top rates.

Source: SF Chronicle