A new year often brings well-intentioned promises to turn a new leaf. Making a resolution to start the year off on the right foot is a ritual shared by many. The same goes for members of Congress.
On the first day of business I put calls for bipartisanship into action. Just as American taxpayers gear up for tax season, I introduced bipartisan legislation aimed at rooting out a parallel tax that threatens to penalize millions of middle-class taxpayers. Known as the Alternative Minimum Tax, the AMT originally was designed to prevent the very wealthiest among us from evading income taxes through otherwise legitimate deductions and tax shelters.
First installed in 1969, the AMT has in recent years captured unsuspecting middle class taxpayers by surprise. Those hardest hit hardly qualify as the wealthiest Americans. They are ordinary middle class families raising children and working hard to make ends meet.
Because it’s not indexed for inflation, the AMT is kicking more families into the two-tiered tax system. Married couples with children who qualify for deductions and credits under the standard tax system get a rude awakening when they discover they are subject to the AMT which cancels many popular deductions.
For several years I have worked to slay this “Absolutely Maddening Tax” to prevent it from rearing its head on tens of millions more taxpayers in the future. As chairman of the tax-writing Senate Finance Committee, I advanced a temporary fix for each of the last six years to exempt millions of middle-income taxpayers from the AMT. With the current “patch” in place, nearly four million taxpayers versus 20 million will pay a higher 2006 tax bill under the AMT. However, if the new Congress fails to act on AMT relief this year, 23 million taxpayers will suffer the consequences for the 2007 tax year.
Policymakers largely agree the AMT is wildly unpopular among taxpayers. What’s more, it taxes those it was never intended to tax in the first place. So why is it so hard to eliminate the nearly 40-year-old tax?
It boils down to lost revenue for Uncle Sam. Federal budget projections count the revenue generated by the AMT. So if lawmakers erase the AMT, a significant chunk of spending money essentially vanishes. To the big spenders who cringe at the thought of less tax dollars to spend, let me just say it’s outright ridiculous to rely on revenue that was never supposed to be collected in the first place.
The new congressional leadership has pledged to root out so-called pork-barrel projects and trim deficit spending. Sounds like more great resolutions. Let’s hope the rhetoric doesn’t ring hollow when lawmakers hammer out the tough choices in the upcoming budget debate.
To those who suggest raising taxes to recover revenue lost from my proposed AMT repeal, I would argue that half-baked proposal ranks just as sneaky as the AMT. Instead of computing ways to keep Uncle Sam’s trough filled by raising taxes, let’s keep the economy strong by keeping the lid on taxes. The landmark tax relief laws I shepherded through Congress in 2001 and 2003 have fueled record revenue growth. Now is not the time to reverse course on American taxpayers.
By introducing my bipartisan AMT repeal bill on the first day of the 110th Congress, I hope to build upon the bipartisan momentum and spirit of cooperation pledged by the new Democratic majority. With 21 co-sponsors already lined up in the Senate, taxpayers across America have reason to hope the AMT repeal bill gains traction before the wheels fall off the bipartisan bus in Washington