May 6, 2004
STARVING THE BEAST, EMPOWERING THE PEOPLE:
House Approves Curb on Alternative Minimum Tax (RICHARD A. OPPEL Jr., 5/06/04, NY Times)
The House on Wednesday approved legislation that would curb — for one year only — the alternative minimum tax, which was meant to prevent the wealthy from taking unfair advantage of tax breaks but has affected many middle-income families.The bill, passed 333 to 89, would cost $17.8 billion in lost tax revenue next year and would shield about nine million individuals and families from paying the tax.
Under the legislation, which adjusts the alternative tax to take account of inflation, three million to four million taxpayers would still pay the tax next year. That is close to this year's number. The Senate is expected to pass some version of the legislation, which has the strong support of the White House.
By offering legislation that expires after one year, Congress once again sidestepped the political perils inherent in a costly long-term fix of a tax widely viewed by both Republicans and Democrats as highly complex, flawed and overreaching. Such a fix, no matter how it is done, will cause the nation's swollen budget deficit to grow much larger.
Simply extending what the House passed on Wednesday for the next decade would cost $337 billion, the Joint Committee on Taxation said. Repealing the tax altogether could cost up to $900 billion over the same period, the nonpartisan Congressional Budget Office said.
Because the tax is, technically, still in full force after this year, official projections for future government revenue and deficits are required to assume that the tax will raise hundreds of billions of dollars in the coming decade, despite the clear intent of Congress to scale it back substantially, if not get rid of it altogether. That has obscured the costs of the tax cuts passed in 2001 and 2003, critics of those tax cuts say.
The Center on Budget and Policy Priorities, a liberal group in Washington, said the cost of extending the Bush tax cuts until 2014 would grow to $1.7 trillion from $1.3 trillion if relief from the alternative minimum tax was included.
Four years, four tax cuts--if only Ronald Reagan had been as principled... Posted by Orrin Judd at May 6, 2004 2:08 PM
Considering the government just lowered its estimate of the fiscal year's budget deficit by $100 million two days ago due to the surge in tax revenues from the economic recovery, extrapolating out all these proposed deficit totals in this story to show how "destructive" Bush's tax cuts will be three presidential terms from now seems even more inane than usual.
Posted by: John at May 6, 2004 3:24 PM> which was meant to prevent the wealthy
> from taking unfair advantage of tax breaks
Here we see the insanity inherent in the AMT--I'm not really for using the tax code to socially engineer behavior, but wasn't that exactly why the tax breaks were written into the code in the first place? What's so bad about people using them?