After seven years of covering the accounting profession I’ve encountered more related acronyms than I thought I’d have to, or for that matter, ever wanted to.
I’ve even resorted to speaking in abbreviations, much like the way folks from Southern California give driving directions: ”Take the 5 to the 405 and then get off at the 101.”
But I digress.
One of the most oft-heard acronyms these days is the AMT, the alternative minimum tax, which was implemented 37 years ago to ensure that the rich and famous pay taxes. But as everyone knows, the number of taxpayers snared in its grasp has been ballooning.
As frightening evidence of this contagion, the number of taxpayers subject to the AMT will jump from 4 million this year to 23 million next year if the law remains unchanged.
Now I won’t rehash for the umpteenth time all the AMT reform proposals floating around, but those impacted by it may soon find themselves overlapping with those affected by another acronym — SCHIP – or the State Children’s Health Insurance Program.
For a quick refresher, SCHIP was created as part of the Balanced Budget Act of 1997 and designed to address the problem of children without health insurance. It was in essence, a partnership between federal and state governments to expand health insurance to children whose families earn too much money to be eligible for Medicaid, but not enough money to purchase private insurance.
An admirable and necessary program to be sure. But like any government initiative, it often mutates into a bureaucratic quagmire.
Case in point, Democrats are pushing to expand SCHIP up to 400 percent of the federal poverty level, which if carried out, would equate to roughly a bit more than $80,000 for a family of four.
As far-fetched as this scenario sounds, there could be up to 70,000 people, according to the Heritage Foundation, who would be affected by both the AMT and SCHIP – those who can’t afford private insurance but may yet find themselves shelling out for the AMT.
Those states most likely to be affected are New York, California and New Jersey. The fact that New York may have up to 15,000 of those folks is in itself a bit ironic, since its Governor, Eliot Spitzer, is among the most vociferous proponents of raising SCHIP to the 400 percent level.
I find it an even greater irony that many of the elected representatives who rail ad nauseum about those in the upper income strata not being taxed enough may soon have middle-income taxpayers grateful for a children’s health program, but irate that their minor windfall was only temporary until the AMT came a-knockin’.
