In a victory for the Republicans, the House passed a one year patch of AMT.  As I had posted earlier, Democrats and Republicans had been at impasse.  Democrats wanted to provide AMT relief only with corresponding tax increases somewhere else, and Republicans didn’t seem to mind more debt.  It seems as the Democrats just caved.  Given that President Bush vowed to veto any bill that included a tax increase, I think the Democrats did the right thing by caving. While not an ideal solution, not doing would’ve been terrible for many American especially if gridlock is a result of politics than actual policy.

Effectively for the next year the AMT threshold is being raised to about 62,000 for joint filers from 45,000 had no fix been passed. This is not to say any joint filer who has income greater than 62,000 will fall under the jurisdiction of AMT, but rather they are just eligible to pay the Alternative Minimum Tax.  You still need to have enough deductions to “qualify” for AMT.   The factis there are still many high income earners would gladly pay 28% instead of what they pay right now.  I’m still keeping my fingers crosses that a brave congress will tackle not only the AMT issue, but put some serious thought towards tax reform.