The House Ways and Means Committee voted 22 to 13 to pass the Temporary Tax Relief Bill of 2007 (HR 3996), the extender bill that includes a one-year AMT fix, on November 1. The measure will be introduced in the House for a vote during the week of November 5.
While we are on the subject of the dreaded AMT, here are some more thoughts and comments on the subject.
Here is what a recent editorial in USA TODAY, titled “For Taxpayers, Something Wicked This Way Comes”, said about the Alternative Minimum Tax:
“The AMT might be best compared to a creature from science fiction…..Now it is a monster that devours everything in its past. [It is] a marker of Washington’s inability to solve any problem that requires paying for the cost of governing or cutting taxes. The result is a complicated tax code that lobbyists exploit and a creeping AMT burden for people the tax shouldn’t touch.”
Len Burman (isn’t he a tv sportscaster?) discusses the AMT in an article titled “The Alternative Minimum Tax – Assault on the Middle Class” in the current issue of the MILKEN INSTITUTE REVIEW. Under the heading “Could Anybody Invent a Worse Tax?” he writes:
“Remember the political embarrassment the AMT was meant to eliminate – those 155 high-income earners who paid no tax….In 2005, 711 returns reported incomes of over $1 Million without any tax liability.”
I agree in theory with Republican Jeb Hensarling of Texas, who said in a letter printed in the Republican Study Committee’s blog, "The correction of tax mistakes should never be offset with tax increases." Since the AMT is an error, repealing the law ought to be free.
The money currently raised by the dreaded AMT is truly “found money”. It is money that Congress never intended to raise when it created the alternative tax system. From Len Burman’s comment it is clear that the dreaded AMT is not doing what it was created to do.
Unfortunately, in practice the repeal of the dreaded AMT must be “paid for” by either increases in the tax rates or reductions in tax benefits. The Congress has fooled the public by using the hidden monies from the AMT to “subsidize” past tax cuts. It knew all along that certain levels of taxpayers would not benefit from tax cuts due to the “stealth tax”, but let them think that they would.