Congressman John Campbell's Blog - Green Eyeshade Blog

Monday, April 30, 2007

Posted by: John Campbell at 6:41 PM

One of the first tasks the new chairman of the Ways & Means Committee, Charlie Rangel, has stated he will undertake this Congress is to reform the Alternative Minimum Tax (AMT). The tax originated in 1969 to make sure a few hundred taxpayers with high incomes were not able to avoid income taxes through aggressive use of tax deductions. Thirty-eight years later, the tax is now targeting over 25 million taxpayers and it's growing.

I find Chairman Rangel's interest and sudden desire to fix the AMT to be quite ironic, especially since for the past 15 years, he and his Democratic colleagues have either been supporting policies that expand the AMT's reach or been obstructing Republican efforts to eliminate it. Just take a look below at their historical record on the matter:

In 1993, the last time the Democrat's controlled the House, Senate, and Presidency, they raised the AMT rate from 24 percent to a dual rate structure of 26 and 28 percent, and on top of that, they failed to index the increases for inflation. As a result, 30 of the expected 31 million taxpayers (97 percent) will be forced to pay the AMT by 2016 because of the Dem's decision not to index the increase for inflation.

In 1999, under Republican control, Congress passed a bill to implement a phased repeal of the AMT by this year. It would have proactively ended the problems we are now experiencing. The measure, however, was met with zero support from Senate Democrat's, and a veto pen from President Clinton. If Clinton had not vetoed it, the AMT would be a non-issue today, eradicated for good. Instead, we stand here today looking down the barrel of this problem.

So what are Charlie Rangel and the Democrat's proposing? In essence, they want to adopt a "steal from Peter to pay Paul" concept that still violates the original intent of the AMT -- keep a select few taxpayers from avoiding income taxes. Stephen Moore wrote a insightful column in the Wall Street Journal this morning, discussing the details of the Rangel plan. Also, a report released by the Senate Republican Policy Committee does a good job of laying out the general issues at stake.

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David writes:	Tuesday, May, 01, 2007 10:03 AM
What did the Republicans do?
When the Republicans had the Congress and White House: Why didn't they eliminate the AMT? Why didn't they eliminate the death tax? Why didn't they reduce the government? Why didn't they reduce the budget? What did they do? And they wonder why they are lossing support.
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justpaul writes:	Tuesday, May, 01, 2007 12:54 PM
Define "reform"
One cannot assume, just because one wants to, that when Charlie Rangel uses the word "reform" he means the same thing Webster's or anyone else would. For all we know, Charlie means that the AMT does not hit enough people and he wants to up the ante. His past positions would indicate such at the very least.
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JPK writes:	Tuesday, May, 01, 2007 3:33 PM
David
Every attempt to eliminate the AMT since 2001 was met by a Democratic Filibuster, or a threat of a filibuster. In 2002-2003 The Democrats threatened a filibuster over Bush's tax cuts (capital gains, death tax, and income tax). The President comprimised and agreed to a phase in through 2004, and he also agreed they would not be permanent. In 2009, by law Congress will vote either to make them permanent or eliminate the tax cuts altogether. Of course, the Senate could filibuster the vote, which would mean an automatic tax increase. David, Because of your friends in the Democratic Party, you will see probably 4 tax increases: AMT due in 2009 Capitial Gains and Income Tax 2010 Reduction in the amount of deductions you will be allowed including the Child Tax Credit - 2010.
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w2 writes:	Tuesday, May, 01, 2007 4:09 PM
Tax Increase
Giving the richest Americans big tax breaks while Americans are dying every day in Iraq is obscene. At the very least there should be a war tax to which everybody should contribute. Then we should return to pay-go and tackle Medicare and Social Security. Closing the loopholes which make the tax code like a sieve for corporations and other special interests would help.
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POLcat writes:	Tuesday, May, 01, 2007 6:06 PM
W2
What! The richest pay most of the taxes anyway, and how does raising their taxes help you? Does it put one dime in your pocket? The tax cuts help everyone, the pain is spread over more as oppose to a few paying much. Besides under the Stalinist taxes you Libs love so much the middle-class gets hammered to. Remember its the rich and middle-class that are the one s that usually start businesses and hire people, keep cranking those taxes up and that kind of growth will slow down or stop. Why is it you hate success? Here's a question for you. One of your heroes (John "The Breck Girl" Edwards) had himself declared a S3 corporation. He did this to avoid paying the max tax on 26 million he earned chasing ambulances. Isn't that hypocritcal of him or any Liberal? He is in favor of raising taxes on everyone but himself, but yet he runs around squalling about two Americas, shouldn't he be paying the max to help end this? He doesn't believe his own rhetoric does he. No shame, no honor, no integrity.
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JPK writes:	Tuesday, May, 01, 2007 9:56 PM
W2
Since 2003 (the year the tax cuts were phased in), the total amount of taxes collected (receipts) has gone up. We now collect nearly $400 trillion dollars more in taxes than in 2003. The tax cuts themselves fund the War in Iraq. A better idea would be to ask the Dems what areas of the budget should be cut to pay for the war?
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About John Campbell

John Campbell is a member of the House Financial Services Committee, and has taken a leadership role in addressing the country's top economic issues. Campbell serves as a member of the Joint Economic Committee, and House Committee on the Budget. He has a Bachelor's Degree in Economics from UCLA and a Master's Degree in Taxation from USC.