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For the last 15 years or so since I started having to pay (or at least run the calculations for) the pernicious Alternative Minimum Tax (AMT), I have considered the AMT to be one of the worst "gotcha" taxes ever devised.

Bruce Krasting points out that, along with the higher rates that everyone will face in 2013 if no deal is reached to avert the "Fiscal Cliff," a significant number of Americans will face higher taxes for 2012, as well.

All the analysis I’ve looked at considers the consequences to the 2013 economy of changing tax rates and reduced spending that will occur if [we go over the Fiscal Cliff]. But this does not include the consequences of the retroactive tax increase for 2012 that will take place...

To repeat, if we go off the cliff, as many as 60 million taxpayers will be forced to file a separate Alternative Minimum Tax form (unbelievably complicated). Of the 60 million, as many as 33 million will be faced with a higher 2012 tax bill. This will result in some folks digging into their pockets to pay Uncle Sam the extra $3,000 to $4,000 this will cost (a disaster for some). Others, will get a smaller refund that they think they are due (bye-bye to that trip to Disneyland). The numbers are big. The “surprise” 2012 tax that the cliff will bring comes to a very lumpy $100-120 Billion.

The drag from the 2012 AMT look-back will be felt in the first quarter. It will “feel” as if this is a 2.5% reduction in 1stQ GDP just from the AMT. By itself, the retroactive AMT tax will produce negative economic growth. ADD to this, the fiscal consequences that kick in on 1/1/13. If spending is adjusted by this much, it will translate into fall in economic activity in excess of 4% in the 1stQ. If the year gets off to such a dismal start, the US will face a technical recession in the first half of the year, the full year will be lucky to breakeven...

I don't know if Bruce overlooked something or whether I have missed something, but I don't recall any of Washington, D.C.'s political class - or the talking heads of the media - saying anything about the AMT "fix."

Let's hope cooler heads prevail - not just to prevent everyone's rates for 2013 returning to the "rates that produced the Halcyon Days of the Clinton Era" - but also to do something about the folks who could get hit with higher 2012 taxes courtesy of Congress's brilliant earlier work of the AMT.

Those folks who "represent" all our best interest in Washington appear to be utterly incapable of any sort of teamwork to actually help us lowly taxpayers who support their limos, fancy health coverage and pensions.

Most of the legislators who control so much of our lives seem to forget that they are entrusted with responsibility to learn to work together for the good of the country.

/end of rant
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