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AICPA supports repeal of alternative minimum tax.

By endorsing H.R. 1186, The Alternative Minimum Tax Repeal Act of 2005, sponsored by Rep. Phil English (R-Pa.), the AICPA is supporting repeal of the individual and corporate alternative minimum tax. The AMT was created to ensure that all taxpayers pay a minimum tax because there was a growing trend in which some high-income taxpayers were able to significantly reduce or eliminate their regular tax by taking advantage of the tax laws, which give special treatment to certain types of income and allow special deductions for certain expenses.

Initially targeted at the wealthiest taxpayers, the tax is now clipping even lower-middle income Americans. When the law was passed, the number of targeted taxpayers was very small--approximately 0.1% of all individuals; the number of taxpayers facing potential AMT liability is expanding exponentially due to "bracket creep" caused by inflation and the growth in incomes and by the classification of commonly used exemptions land deductions as "tax preferences." While approximately 3.5 million individual taxpayers were subject to the AMT in 2004, estimates indicate the AMT will affect 33 million taxpayers by 2010.

The corporate AMT suffers from the same infirmities as the individual AMT. It requires corporations to keep at least two sets of books for tax purposes: imposes numerous other burdens on taxpayers: and has the unfortunate effect of taxing struggling or cyclical companies at a time when they can least afford it.

"We welcome the support of the AICPA for our bill," said Rep. English, a member of the House Ways and Means Committee which has jurisdiction over tax issues.
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Title Annotation:tax info
Publication:CPA Letter
Date:Jul 1, 2005
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