4.3% Tax Surcharge for the wealthiest Americans?

As most people know because of cogresses failure to index the AMT (Alternative Minimum Tax) for inflation more and more people have faced the possibility of having to pay it each year. According to today's Washington Post Rep. Richard E. Neal (D-Mass) has proposed a 4.3% surcharge on households making more than $500,000 in order to fund the elimination of the AMT. Sounds like a good idea right? Problem is his colleagues think the threshold is too high:

House Democrats looking to spare millions of middle-class families from the expensive bite of the alternative minimum tax are considering adding a surcharge of 4 percent or more to the tax bills of the nation's wealthiest households.

Under one version of the proposal, about 1 million families would be hit with a 4.3 percent surtax on income over $500,000, which would raise enough money to permit Congress to abolish the alternative minimum tax for millions of households earning less than $250,000 a year, according to Democratic aides and others familiar with the plan.

...

Neal has yet to release details of the plan, however, and others inside and outside the committee say major pieces of it are still in flux. Some Democrats say Neal's plan stretches the definition of the middle class too far, providing AMT relief to too many wealthy households. They argue that the cutoff for families to be spared from the AMT should be lower, at $200,000, $150,000 or even $75,000.

Looks like a lot of people should start thinking about shelling out an extra couple of grand a year.
Note: The article makes it clear that this is not going to happen immediately but I think it gives and idea of where the debate is heading. Couple this with the drive to repeal / allow to expire the 2001 and 2003 tax cuts and you are going to have a lot of people with a hugely increased tax bite

Income Tax, Politics