Tax Increase Prevention and Reconciliation Act of 2005 - TIPRA
George Dubbya Bush signed the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) into law, which...as the name suggests...is an edit on some pre-existing tax laws.
The bill was passed in response to impending expiration dates on tax changes from previous bills. Edits included keeping capital gains and dividend taxes low until at least 2010, as they were about to go up again. People cashing out on investments within the next five years were celebratin'.
The other big kicker in TIPRA was the extension of the alternative minimum tax (AMT) tax reduction. The AMT is a federal tax on certain people, corporations, estates, and trusts that have qualified for lower payments on the regular income tax.
While TIPRA prevented a spike in taxes in these areas, its critics at the time pointed out the growing federal budget deficit, and how TIPRA only benefited the relatively wealthy and corporations. It’s no surprise that TIPRA was largely passed along party lines, with Republicans saying "yay!" and Democrats saying "nay."
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Finance: What is the Alternative Minimum...2 Views
Finance a la shmoop. What is the alternative minimum tax or AMT? People
it's evil pure evil originally the alternative minimum tax affectionately [Guy wearing devil horns with flames in the background]
called alt min existed so that truly wealthy taxpayers had to at a minimum [Guy opens a letter from the IRS]
pay something think about the concept when you envision a Warren Buffett with
over sixty billion dollars in net worth paying a hundred grand a year in taxes
yeah that's what he does well the problem the altman tax system wasn't
indexed to inflation so lots of middle-class folks today now indexed to [Lots of people walking]
inflation are caught in the alt min trap this is the tax system that ended up
punishing the super duper wealthy you know people like in orthodontists
married to a substitute school teacher that's who alt min punishes yeah the tax [Tooth and drawing of a teacher appear]
man cometh for you well Congress gave birth to this tax in
nineteen sixty nine because well at the time a hundred fifty five tax payers had [Guy holding the alt min tax bill]
the temerity to pay no tax today about 5 million people pay alt min taxes which
has really become a parallel tax or incremental tax to the normal tax people
already pay the taxpayer figures out his tax completely ignoring alt min at first [Woman looking through papers]
then she figures out what she owes under alt min and if she owes more under alt
min well then she pays alt min if she owes more without alt min well then she [The tax bills are shown]
just ignores it in other words the IRS always wins the schmucks caught in alt
min lose all sorts of deductions state and local taxes business expenses and
childcare and it's pretty much the middle class of America today who bears
the most pain in this alt min situation people in high tax states bear much of [High tax states are highlighted]
the burden but well good for the IRS they were really hurting [Desk full of piles of tax checks]