KEY POINTS

ALTERNATIVE MINIMUM TAX

• Congress created the AMT to prevent Americans from avoiding their tax liability, not to raise taxes on the middle class. If left unchanged, by 2010, two in three taxpayers with incomes between $50,000 and $500,000 will pay higher taxes as a result of the AMT, a contradiction of congressional intent.

• Fire fighters in particular have the potential to be disproportionately affected by the AMT because it targets their demographic: married, middle-class taxpayers with children in high-tax states.

• With increasing health insurance expenses as a result of hazardous and strenuous work conditions and increasing homeland security demands placed on them, fire fighters don’t have room in their monthly budgets for a tax increase.

• According to National Taxpayer Advocate Nina Olson, head of the independent Taxpayer Advocate Service within the IRS (which helps taxpayers comply with the federal tax code), the AMT is “the most serious problem facing taxpayers today.”

• The AMT should not be the crutch of the federal budget. Although the cost of repealing the AMT is high (the fix for 2007 would cost $48 billion), it pales in comparison to the $300 billion a year in taxes the federal government fails to collect each year. Honest middle-class taxpayers who pay their fair share in taxes should not have to pay higher taxes under the AMT to compensate for those who commit tax evasion.

• The AMT harms the economy and the taxpayer. It increases taxes on the middle-class and increases compliance costs for taxpayers. Taxpayers with incomes between $50,000 and $75,000 already spend between $780 and $1,170 to comply with complex federal tax laws. The AMT is a double-edged sword: it increases already substantial compliance costs and simultaneously imposes higher taxes.

• Some taxpayers are subject to the AMT one year, but not the following year. Therefore, some taxpayers are subject to ever-changing rules and rates, further increasing compliance costs and slowing economic growth.