On the Issues
The Alternative Minimum Tax (AMT)
The AMT was originally designed to ensure that all taxpayers, especially wealthy ones, pay at least a minimum level of federal income taxes, but it was not adjusted for inflation. As a result, the AMT’s reach has slowly expanded well into the middle class.
The new leadership of the 110th Congress attempted to address the longstanding AMT problem in a fiscally honest way, without continuing the explosion of the national debt that has occurred under the Bush Administration. Unfortunately, Senate Republicans successfully blocked two different bills that would have fixed the AMT while offsetting the cost to the budget by taxing the personal income of hedge fund managers at normal income tax rates (they currently enjoy capital gains rates on income that is essentially contingency fees). They also rejected a plan to offset the cost by reinstating restrictions on the use of offshore havens by multinational corporations to reduce their tax liability. Due to this refusal to compromise, Congress was forced to pass another one-year AMT relief measure that is not paid for and will add to the national debt.
As the 2010 expiration of many Bush-era tax cuts approaches, I am hopeful that Congress and a new administration can achieve a permanent adjustment of the AMT that protects middle-income Americans.
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