Origin of the Alternative Minimum Tax - 1969 (yes, the same year as Woodstock)
By: kinal | Posted: 18th June 2009
From Title 26 of the United States Code - also known as the Internal Revenue Code:
"Subchapter A of chapter 1 (relating to determination of tax liability) is amended by adding at the end thereof the following new part:
"Part VI - Minimum Tax for Tax Preferences
"Sec. 56. Imposition of tax.
"In addition to the other taxes imposed by this chapter, there is hereby imposed for each taxable year, with respect to the income of every person, a tax equal to 10 percent of the amount (if any) by which…."
With these words, and President Richard Nixon's stroke of a pen on December 30, 1969, the monster parent of the current day Alternative Minimum Tax was born. Not unlike Dr. Frankenstein's monster, the creators of the AMT had no concept of what its unfortunate consequences ultimately would turn out to be.
History generally attributes the origin of a minimum tax to testimony by Secretary of the Treasury Joseph Barr in Congressional committee hearings on the 1969 Tax Reform Act. In a comment that resulted in much publicity and a general outcry from politicians and common folk alike, he noted that a whopping 155 people with adjusted gross incomes of over $200,000 had paid no taxes on their 1967 tax returns.
Of course, when a "good" idea like this originates, many people are anxious to take credit. Among the many of us back in D.C. who didn't make it up to Woodstock, President Nixon himself claimed to have had the idea. From his Statement on Signing the Tax Reform Act of 1969:
"Eight months ago, I submitted a sweeping set of proposals to the Congress for the first major tax reform in 15 years, one which would make our tax system more fair.
"In terms of long-overdue tax reform, most of my major reform proposals were adopted.
"A large number of high-income persons who have paid little or no Federal income taxes will now bear a fairer share of the tax burden through enactment of a minimum tax comparable to the proposal that I submitted to the Congress, which closes the loopholes that permitted much of this tax avoidance."
From this simple "fix" of the 155 non-taxpayer problem 40 years ago, the monster has evolved to where recent IRS statistics show that over 4 million taxpayers currently are paying the AMT!
George Bauernfeind is with AMT Individual - providing information on Alternative Minimum Tax Planning . He writes articles to help the tax payers to pay less Alternative Minimum Tax. He recommend to use Alternative Minimum Tax Calculator to reduce Alternative Minimum Tax.
This article is free for republishing
Printed From: http://www.goinglegal.com/origin-of-the-alternative-minimum-tax--1969-yes-the-same-year-as-woodstock-943395.html
Back to the original article
Tags: tax liability, tax burden, internal revenue code, outcry, alternative minimum tax, federal income taxes