The Alternative Minimum Tax has finally been altered so that it won’t
hurt middle-income families. For years, people have assumed this was
just a tax on the wealthy but it was never indexed to inflation. In fact
it has been modified or revamped 19 times in the last 42 years. Now it
is indexed to inflation, so many families that worked their way into it,
or were sitting on the bubble worrying about qualifying for it, now
will do neither.
For years the tax was set at $45,000 and as median incomes grew it hit more and more people. One economist estimates that almost 28 million families would have to pay $3,400 in extra taxes each year, if this was not indexed to inflation. Tax credits were also extended for low-income families, and the “doctor fix” was enacted so that Medicare providers do not get reimbursed drastically less than they would. A farm bill was also extended nine months that would have drastically raised the price of milk, something everyday people depend on.