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Finance: What is the Alternative Minimum Tax? 2 Views
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Description:
What is the Alternative Minimum Tax? Alternative minimum tax is a different way of calculating tax liability. It’s only available to some individuals and companies though; eligibility depends on income and different exemptions that can be claimed. After factoring in deductions that the taxable entity is eligible for, the alternative minimum tax exemption is subtracted from income to determine the amount that will be taxed.
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- Terms and Concepts / Tax
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Transcript
- 00:00
Finance a la shmoop. What is the alternative minimum tax or AMT? People
- 00:08
it's evil pure evil originally the alternative minimum tax affectionately [Guy wearing devil horns with flames in the background]
- 00:15
called alt min existed so that truly wealthy taxpayers had to at a minimum [Guy opens a letter from the IRS]
- 00:21
pay something think about the concept when you envision a Warren Buffett with
- 00:27
over sixty billion dollars in net worth paying a hundred grand a year in taxes
Full Transcript
- 00:31
yeah that's what he does well the problem the altman tax system wasn't
- 00:35
indexed to inflation so lots of middle-class folks today now indexed to [Lots of people walking]
- 00:42
inflation are caught in the alt min trap this is the tax system that ended up
- 00:47
punishing the super duper wealthy you know people like in orthodontists
- 00:52
married to a substitute school teacher that's who alt min punishes yeah the tax [Tooth and drawing of a teacher appear]
- 00:56
man cometh for you well Congress gave birth to this tax in
- 01:00
nineteen sixty nine because well at the time a hundred fifty five tax payers had [Guy holding the alt min tax bill]
- 01:05
the temerity to pay no tax today about 5 million people pay alt min taxes which
- 01:11
has really become a parallel tax or incremental tax to the normal tax people
- 01:16
already pay the taxpayer figures out his tax completely ignoring alt min at first [Woman looking through papers]
- 01:21
then she figures out what she owes under alt min and if she owes more under alt
- 01:26
min well then she pays alt min if she owes more without alt min well then she [The tax bills are shown]
- 01:30
just ignores it in other words the IRS always wins the schmucks caught in alt
- 01:34
min lose all sorts of deductions state and local taxes business expenses and
- 01:39
childcare and it's pretty much the middle class of America today who bears
- 01:44
the most pain in this alt min situation people in high tax states bear much of [High tax states are highlighted]
- 01:48
the burden but well good for the IRS they were really hurting [Desk full of piles of tax checks]
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