Middle-Class Alternative Minimum Tax Relief Act of 2004

MIDDLE-CLASS ALTERNATIVE MINIMUM TAX RELIEF ACT OF 2004 -- (Extensions of Remarks - May 14, 2004)

SPEECH OF
HON. BETTY McCOLLUM
OF MINNESOTA
IN THE HOUSE OF REPRESENTATIVES
WEDNESDAY, MAY 5, 2004

Ms. MCCOLLUM. Mr. Speaker, I rise today on behalf of the more than 2 million taxpayers who are unfairly burdened by the alternative minimum tax.

The AMT was originally designed in 1969 to ensure that the wealthiest Americans would still pay a fair share of taxes.
The AMT now burdens many middle income Americans in what was once envisioned as an alternative minimum tax has now become more of a mandatory maximum tax.

The AMT is not a technicality of significance to only a few bureaucrats and the tax lawyers. It is not a mere glitch, the repair of which would only help a handful of wealthy individuals. It is a system that affects 2.4 million families this year. By 2010, 30 million Anrencans will be faced with minimum tax liability.

Unfortunately, under the Republican bill today, AMT exemption would only be raised to $40,250 for single taxpayers and $58,000 for married couple filing jointly in 2005. This would still leave 1 million families paying the AMT. Unlike other tax cuts being forced through by Republicans, this will only be a temporary 1-year fix. The Congressional Budget Office estimates that a true fix of the AMT would cost $376 billion over 10 years. But Republicans have refused to pull back their tax cuts for the wealthy, which have created a $3 trillion deficit, in order to pay for this essential middle class tax relief.

I ask unanimous consent to insert into the record an editorial from the May 10, 2004 Los Angeles Times highlighting the budget gimmicks being used to disguise the cost of AMT and other tax cuts.

Today Democrats bring to the House floor a true solution to the AMT problem. The Democratic substitute completely exempts married couple families with incomes under $250,000 from the alternative minimum tax, providing tax relief to more than 10 million families.

The Democratic plan is fully paid for by cracking down on corporate tax shelters. Nearly two-thirds of corporations paid no tax at all in 2000 and this is an important step to ensuring that corporations pay their fair share while relieving middle class families from the unfair burden of the alternative minimum tax.

It is important that we act today to ensure average income Americans will not unfairly face the alternative minimum tax in 2005. However, I believe we should provide this relief in a fiscally responsible manner that will not burden future generations of Americans. I urge my colleagues in joining me today in support of real AMT relief.[From the Los Angeles Times, May 10, 2004]

PRESTO!--IT'S DEFICIT MAGIC

Federal Reserve Chairman Alan Greenspan is increasingly testy about the perils of the federal budget deficit, warning Congress and the Bush administration last week that it poses "a significant obstacle to long-term stability." The higher the debt goes, the more the threat of inflation increases. That forces the Federal Reserve to raise interest rates, slowing economic growth. Friday's sunny job creation figures, though good news, also intensify pressure to raise rates.

The Congressional Budget Office projects a deficit of $477 billion for 2004--and by 2013, a recent average college graduate will shoulder $51,520 of the total national debt. The new $25 billion request by the White House to underwrite the Iraq occupation will be on top of those projections. But Congress continues living in a fiscal house of mirrors, using gimmickry to disguise the cost of current and proposed tax cuts.

The mischief begins with the one-year curb on the so-called alternative minimum tax that the House approved Wednesday. If enacted, it will shield about 9 million individuals and families at a cost of $17.8 billion to the Treasury. The AMT is a parallel tax system originally designed to prevent the wealthy from avoiding all income taxes. But because it was not indexed for inflation, middle-class taxpayers are falling within its limits. Indexing the tax makes sense, but not on top of the more reckless cuts already passed.

Now Congress seeks to have it both ways by relying on one-year extensions. It pretends at budget time that hundreds of billions of AMT dollars will be available over the next decade. Then it can turn around and extend AMT relief for another year.

The "marriage penalty" produces another sleight of hand. A tax code quirk often penalizes married couples when both spouses work. Once again, relief is good in theory but lawmakers aren't honest about lost revenue. By pretending the AMT will be in effect, they assume for budgeting purposes that about half of the tax cuts the AMT is intended to provide for married couples will be canceled out. Dizzying as well as deceptive.

The congressional Joint Committee on Taxation estimates that if, as is likely, the AMT is curbed each year, the bill the House passed April 28 for marriage relief would cost $204 billion over 10 years, not $105 billion.

If Congress rolled back the parts of the tax cuts that benefit the most wealthy, changes to the AMT and marriage penalty could be considered, but cuts already enacted reduce federal taxes of households with incomes above $1 million an average of $123,600 in 2004. Over the next decade, interest payments on tax-cut debt will amount to all that the government spends on the departments of Education, Homeland Security, Interior, Justice and State.

The longer that lawmakers budget by fakery, the more they will inundate future generations with trillions in debt.
Whom will those generations blame?