Alternative Minimum Tax Targeted: Democrats Seek Fix For Middle-Class Families (Lori Montgomery, 11/11/06, Washington Post)
By 2010, “the AMT will become the de facto tax system for filers in the $200,000 to $500,000 income range, 94 percent of whom will face the tax,” according to a report by the Tax Policy Center. About half of tax filers making $75,000 to $100,000 will have to pay the tax, including 89 percent of married couples in that income bracket who have at least two children.
In the past, Congress has patched the AMT one year at a time, primarily by increasing the exemption amount. Next year, to hold the number of affected taxpayers steady at about 4 million, the patch would cost about $50 billion, according to the Joint Committee on Taxation.
Getting rid of the tax altogether would be even more expensive: more than $1 trillion over the next decade, by various estimates. Budget experts doubt that Democrats can do it without reneging on their promise to reduce the budget deficit or winning an agreement from Republicans to raise taxes elsewhere.
In recent weeks, experts from both parties have called the nation’s fiscal situation dire and called for a bipartisan summit to address a variety of ticking time bombs set to explode soon after the 2008 presidential election, including the AMT, Social Security, Medicaid and Medicare.
“You cannot solve this nation’s fiscal problems without increased revenue,” Robert E. Rubin, the Clinton administration Treasury secretary, told the Economic Club of Washington this week.
Political analysts see little chance for that kind of cooperation until after 2008. Bush is heavily committed to maintaining his tax cuts, arguing that they have spurred the nation’s economy. And analysts say Bush is unlikely to participate in a summit that could produce the kind of tax increase that helped drive his father, President George H.W. Bush, out of office.
White House spokesman Tony Fratto said this week that fixing the AMT is “absolutely a priority” for the president. But for now, Fratto said, “The Democrats have an opportunity to put their ideas on the table.”
The last time the Democrats had to propose legislation based on their “ideas” was ’93-’94. How’d America like it?