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Complaint about Maryland taxes fails to consider effect of the alternative minimum tax

Income TaxPersonal IncomeInternal Revenue Service

In his op-ed "Annapolis dines at federal expense" (June 13) Sean Kennedy wrote: "The more Maryland taxes federal employees, the less money Uncle Sam can ask from them in taxes." I have issues with this on several points.

First, this applies to all workers, not just federal, and it is an attempt by the IRS to eliminate income taxes on money that is spent to pay other income taxes. Second, it only applies if one itemizes and does not take the standard deduction. Third, the alternative minimum tax eliminates this subsidy since it does not recognize either the standard or itemized state tax deduction (or personal exemptions either). It replaces these with an AMT exemption. In 2012, (for married, filing jointly) this will be reduced to $45,000 (from $74,450 in 2011) and will dramatically increase the taxes owed by most middle class citizens.

For example, using "the average salary for a federal employee in the area" of $95,000 and a family of four claiming the standard deduction, they might expect to pay Uncle Sam $9,315 in taxes for 2012. But the AMT, because of the decrease in the exemption, will demand $13,000, or a $3,685 increase. This is an increase of almost 40 percent! Perhaps "American taxpayers should be outraged" about this tax code gimmick.

Robert Ehrlich stated in a recent column that "only a Republican House could guarantee no tax increases as part of a budget deal." How is this additional 40 percent not a tax increase? Maybe Mr. Kennedy's think tank should think about this hidden tax increase of thousands of dollars per family.

Roger Hendrix, Pasadena

Copyright © 2014, The Baltimore Sun
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