June 02, 2004

I have been intending to write an article about the Alternative Minimum Tax (AMT) for quite some time now, and this nice lady Gail Buckner, who writes about money matter for Fox News, saved me a lot of work.

The Bush tax cuts were a clever deception. Just as a magician diverts your attention from what he's actually doing, the AMT was silently slid into effect at the same time as Bush's tax cuts were implemented, and the result is an offsetting increase in federal government tax revenue.

Most Americans don't realize how much of the federal tax dollars they pay are being redistributed to citizens and non-citizens alike who qualify for the Earned Income Tax Credit. It is one of the most cleverly devised wealth redistribution schemes I have ever analyzed -- and it will make you angry.

Ten years ago, my income was offset by so many business start-up and paper deductions that I paid no federal income tax whatsoever, and just a very small amount in self-employed FICA contributions.

To my utter astonishment, I received a check from the Treasury in the amount of around $462.00 or so. I didn't pay a dime in taxes, and the check amount exceeded what I paid in FICA taxes by about 400%, so I immediately contacted my tax preparer to find out why I received that check. He was just as surprised as me when he called back to tell me I was considered poor, and I therefore qualified for the Earned Income Tax Credit!

Until that moment, I didn't realize what a clever socialist tool the EITC was. Single mothers with 2 children and low income would often pay little or no income tax, yet receive over $3,000.00 annually from the EITC, and it gets worse.

Let's say you're an illegal alien with 4 kids who earns $10,000.00 in reportable income, and $25,000.00 in non-reportable income from performing such work as private property landscaping, private house cleaning services, etc. You'll file your Form 1040 for the $10,000.00 and pay no income tax, but the EITC will pay you a handsome bonus tax-free each and every year. In the meantime, you Americans earning in excess of $50,000.00 annually in IRS-reported W-2 or 1099 income think you got a nice tax break, whilst the Alternative Minimum Tax comes right behind and takes all or most of it right back.

From now on, when illegal immigrant advocates claim undocumented workers file and pay income taxes, you'll know how to respond. If I was getting a $5,000.00 in an annual, tax-free bonus from the Earned Income Tax Credit after paying no income tax on my reported income, I'd happily file a 1040 as well. Now you know the truth.

Anyway, here is Gail's article on the Alternative Minimum Tax. I suggest we follow her suggestion and bombard our representatives with demands to abolish it.

Carl F. Worden

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