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Mr. HATCH. Madam President, I thank my colleague.
Last week, I discussed some unfinished business that remains for Congress and the President to address. Specifically, Congress must take up a number of tax-related matters in very short order.
When I discussed this tax agenda last week, I referred to this chart. Things have not changed since then. As this chart shows, the tax extenders, which are overdue by almost one-half year, are not alone on Congress's to-do list.
We need to resolve the death tax. Death tax relief expires at the end of 2012. We need to prevent the 2013 tax hikes. As I noted earlier, we have the so-called tax extenders that are right there, and we have to address the alternative minimum tax--or AMT--the second one on that list. The issue of the AMT is what I would like to address today.
Thirty-one million American families will be caught by the AMT or are already caught. Yet Congress has done nothing to address the AMT. The alternative minimum tax is a stealth tax on 27 million families. Approximately, 3.9 million families paid the AMT last year, and they may not be surprised if it hits them again this year. But for the other 27 million American families set to be ensnared by the AMT, this represents a significant and stealthy tax increase.
The AMT burden is, in fact, far broader than just the 31 million American families who are in its sights. Nearly double that number--60 million American families--must fill out the AMT worksheet to determine whether they owe an alternative minimum tax. While not as bad as paying the tax itself, the task of compliance is just another time-consuming, government-imposed challenge for Americans families they don't need to have.
To get some idea of the magnitude of the AMT's reach, consider this chart. It breaks down, State by State, the number of American families hit by the AMT.
When I speak of those now being caught by this tax, I am referring to those families who make estimated tax payments and who are scheduled to make their second payment tomorrow.
Last year, 3.9 million families were hit by the AMT. I think this was 3.9 million too many, but it is considerably better than the more than 31.1 million who will be hit in 2012.
The reason we are threatened by such a large increase this year is that over the last 11 years, Congress has passed legislation to temporarily increase the amount of income exempt from the AMT. Unlike many other provisions of the Tax Code, the AMT exemption amount is not automatically adjusted for inflation. These temporary exemption increases have prevented millions of middle-class American families from falling prey to the AMT, until now.
While I have always fought for these temporary exemptions, I believe the AMT ought to be permanently repealed. One reason to pursue permanent repeal is the uncertainty that the AMT creates for taxpayers when Congress must revisit and adjust it every year.
Unfortunately, a permanent fix does not appear to be forthcoming. Congress has yet to undertake any meaningful action on the AMT. President Obama has proposed permanently patching or maybe even repealing AMT. Yet what he gives with one hand, he takes away with another.
He has proposed to pay for an AMT fix with this so-called Buffett tax. The thing is, the Buffett tax is nothing more than a new alternative minimum tax. The solution to the alternative minimum tax problem surely can't be an alternative minimum tax.
Moreover, the revenue generated by the Buffett tax--in spite of the suggestion by the President that this tax on the rich could pay for all things good--would not come close to providing the revenue necessary to address the AMT in a meaningful way.
Despite assurance from the President and his allies that AMT relief is an important issue, nothing has actually been put forward as a serious legislative solution for this year. There has been no Senate committee markup or floor action for tax extenders, the AMT patch, death tax reform or even preventing 2013 tax hikes.
This year is about half over, and all we have is talk about the need to address the AMT, but a theoretical discussion is not a substitute for real action, as anyone making a quarterly payment today will attest to.
Everyone seems to agree something needs to be done--and done quickly--but the discussion does not go any further from there. We are out of time. The second quarterly AMT payment is due. Today, taxpayers across the country are under a legal requirement to pay their estimated tax. They will use the form depicted on this chart right here--``2012 Estimated Tax.'' Though I hope otherwise, I expect I will be here again when the third payment comes due saying basically the same thing.
A question remains about whether people who should be making an estimated tax payment tomorrow actually will. Most of these 31 million taxpayers subject to the AMT do not even know they are subject to the alternative minimum tax, so they will not be making that estimated tax payment tomorrow, even though they should. If one fails to pay sufficient estimated tax or have a sufficient amount of wages withheld on a timely basis throughout the year, then one can be subject to interest and penalties. This is an awful spot for Congress to put the American families in.
It is also worth recalling that the IRS cannot just flip a switch and have its systems in place for an AMT patch. This is not done overnight. It takes months. The Congress's failure to act on a timely basis could actually delay the processing of 2013 refund checks perhaps by even a few months.
The failure of Congress to promptly enact an alternative minimum tax fix would have a cascading effect on our system of tax administration. Software providers and tax preparers would struggle to keep up.
One of the issues holding back an AMT fix is that many on the other side insist that, unlike new spending proposals or extensions of existing spending programs, AMT reform should happen only if it is revenue neutral. That means any revenues not collected through reform or repeal of the AMT must be offset by new taxes from somewhere else.
Notice that I said "not collected'' rather than "lost.'' This distinction is important for the simple reason that the revenues we do not collect as a result of AMT relief are not truly lost. The AMT collects revenues it was never supposed to collect in the first place. If we offset revenues not collected as a result of AMT repeal or reform, total Federal revenues over the long term are projected to push through the 30-year historical average and then keep going.
Originally conceived as a mechanism to ensure that high-income taxpayers were not able to eliminate their tax liability completely, the AMT has failed. The AMT was originally created back in 1969, with just 155 taxpayers in mind--155--a mechanism to ensure that high-income taxpayers were not able to eliminate their tax liability completely. The AMT has failed completely. On the one hand, as IRS Commissioner Everson told the Finance Committee in 2004, the same percentage of taxpayers continues to pay no Federal income tax.
On the other hand, the AMT is projected to bring in future revenues it was never designed to collect. At least 31 million middle-class families are now in the AMT's crosshairs, and that was never meant to be. That is quite a change from 155 rich people who never paid any taxes. It should serve as a cautionary tale for those who believe today's tax increase proposals will remain limited to the so-called wealthy.
During the 2008 campaign, President Obama advocated for a permanent AMT patch. His budgets have maintained that position. While permanent repeal without offsetting the AMT is the best option, we absolutely must do something to protect taxpayers immediately, even if it involves a temporary solution, such as an increase in the exemption amount. Of course, if we do that, we are going to be in the same fix next year, and I will again be making the same points.
This coming Friday--June 15, 2012--taxpayers making quarterly payments are going to once again discover that the AMT is neither the subject of an academic seminar nor a future problem we can put off dealing with. The AMT is a real problem right now. If this Congress was truly serious about tax fairness, it does need to stand and take action.
I would like to take a few moments to address another matter of importance.
A conference committee is currently meeting with the goal of producing a transportation bill. As I said at the public meeting that was held last month, ensuring that local communities have a strong voice in the transportation decisionmaking process is a priority of mine. There are many ways this can be achieved, but one particularly effective method is through the implementation of environmental streamlining.
Negotiations are still ongoing, so I do not want to go into too much detail. Yet environmental streamlining is something that will benefit my own home State of Utah and every other State that is currently forced to comply with redundant and oppressive redtape when engaging in transportation projects with the Federal Government.
The highway trust fund, which funds many transportation programs, currently has more money coming out of it than is going into it. While there are many who want to deal with bloated and unfocused spending by raising taxes, I disagree. If revenues do not meet outlays, then we should not be punishing the American taxpayer; rather, we should be reevaluating spending priorities.
In addition to examining what Congress spends money on, we need to ensure that money being spent is spent efficiently. Currently, governments at the Federal, State and local level spend considerable resources complying with Federal regulations designed to protect the environment. Given that many of these regulations have accumulated over time, I am confident that we can scrape many of these barnacles off the ship of state without harming the environment.
Both the Senate and the House recognize the truth of what I am saying, and both bills currently in conference reflect this sentiment. Both contain provisions designed to streamline or simplify the environmental reviews with which transportation projects must comply. In particular, I am appreciative of the efforts shown by Chairman Mica of the House Transportation and Infrastructure Committee for his role in highlighting the importance of environmental streamlining within the conference committee.
Madam President, I inquire how much time I have remaining.
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Mr. HATCH. I do not want to infringe on my colleagues. Let me just say this: I am appreciative of the efforts shown by Chairman Mica of the House Transportation and Infrastructure Committee for his role in highlighting the importance of environmental streamlining within the conference committee. I hope the rest of my fellow Senate conferees are carefully reviewing his suggested language. I know all of us want to do all we can to expedite project delivery times while minimizing redundant costs. Chairman Mica is clearly eager to engage on this topic.
President Obama has talked in the past about the importance of funding shovel-ready jobs. All we are asking is when there is a shovel-ready job to move forward without undue or unnecessary environmental reviews.
I close with an appeal rooted in my role as ranking member of the Finance Committee. The highway trust fund is currently on a path to insolvency, and the Senate bill does not change that. By working with our colleagues in the House we can make sure taxpayer money is not wasted on redundant and unnecessary compliance and regulation. Despite current policy being green in the environmental sense, it does not mean we have to sacrifice being green in a budgetary sense.
Mr. President, I yield the floor.
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