[quote=ocrenter][quote=PatentGuy]True, Flu, but the AMT rate is 28%, whereas the top marginal rate is 35%, going up to 39.5%, so you still pay more than the AMT rate if you are “rich”, even with the lost deductions. This will be especially true starting in 2011, when the itemized deduction phase-out is back in full force, since AMT income will be much closer to regular income.
Be thankful you don’t have New Jersey style property taxes (yet) in CA. AMT must crush the $250K earners in New Jersey who are paying $25K and up in property taxes in addition to state income taxes, plus mortgage interest.[/quote]
as far as logic goes. it really doesn’t make sense that state and property taxes are not deductible but mortgage interest is.
after all, isn’t that double taxation on those amount?[/quote]
well, to some extent, I think it does. I believe under normal tax calculations, taxes paid on things are deductible, including income tax, property tax, and personal property tax. So if was allowed under AMT, taxes paid by someone for his personal yacht or his N+ vacation homes he uses to hook up with his mistresses would lower his over tax bill if they were not excluded from AMT deductions. (I guess the rationale goes, super rich don’t take out mortgages to buy these things…) The issue with AMT was that is was never adjusted to keep up with inflation. The second big ding about AMT was folks who exercised incentive stock options but didn’t sell in the same year. A lot of people got burned by that bigtime. Most day, companies issue non-qualified so this isn’t an issue…or they make you do a exercise and sell the same day.
