Thirty million Americans would be saved from the Alternative Minimum Tax (AMT) under a bill that was introduced by House Republicans October 11, its sponsors say. The bill, The Taxpayer Choice Act, would repeal the AMT and give taxpayers a choice of how they wish to pay federal income taxes: under the current tax code or through a “simplified tax.” The sponsors of the bill are Representatives John Campbell (R-California), Jeb Hensarling (R-Texas), and Paul Ryan (R-Wisconsin).
The simplified tax would use two income tax rates: a 10% rate on taxable income of $100,000 for joint filers and $50,000 for single filers, and a 25% rate for income above $100,000, says Tim Flynn, a House Budget Committee staffer. The current tax code uses six tax rates, so the bill’s simplified tax of two rates is an attempt to “clean up” the tax system and make it easier–and less costly–for individuals to prepare their taxes, Flynn says.
Speaking of taxes, regardless of who wins the White House in 2008, taxpayers can expect a major tax bill to be introduced in 2009, says Randy Hardock, an attorney with Davis & Harman in Washington. “Every President does a major tax bill in their first session,” he said at T. Rowe Price’s Investment Symposium in Baltimore October 9. “The 2009 tax bill will include major reshuffling in the tax burden and major tax increases.”