Wyden, Finance Committee Colleagues Seek Alternative Minimum Tax Repeal
Bipartisan coalition introduces legislation to end "number one problem"for millions of middle-class American taxpayers
Washington, DC - U.S. Senator Ron Wyden (D-Ore.) and a bipartisan coalition of his U.S. Senate Finance Committee colleagues, including Chairman Charles Grassley (R-Iowa), Ranking Member Max Baucus (D-Mont.) and Jon Kyl (R-Ariz.), today introduced legislation to repeal the Federal individual alternative minimum tax (AMT). The AMT requires taxpayers to figure their tax bills both with and without certain deductions, then to pay the higher amount. It was originally enacted in 1969 to ensure that America's wealthiest taxpayers could not use deductions and loopholes to avoid paying taxes they owed. However, the AMT has not been indexed for inflation and now saddles millions of middle-class, middle-income Americans with higher tax bills. The Internal Revenue Service's own National Taxpayer Advocate has called it the most serious problem facing individual taxpayers today. "If the IRS calls the alternative minimum tax the number-one problem for individual American taxpayers, then the AMT should be Congress' number-one priority for tax reform," said Wyden. "Middle-class Oregonians who are paying their fair share of taxes shouldn't be subject to higher burdens because the Federal government has failed to update the law." Wyden was on hand for a Finance subcommittee hearing today entitled "Blowing the Cover on the Stealth Tax: Exposing the Individual AMT." For Americans over a certain income range, the AMT eliminates certain tax benefits such as personal exemptions, itemized deductions for state and local taxes, and deductions for children; those normally deducted amounts are counted as income and subject to Federal tax. The current temporary "patch" or increase in AMT exemptions, a mechanism often used to keep the tax from affecting even more Americans, is set to expire at the end of 2005. According to the Congressional Research Service, the end of those exemptions would increase the number of taxpayers paying the AMT to more than 19 million next year - up from 2.3 million in 2003. In that year, 29,000 Oregonians were subject to the AMT. The AMT was never intended to tax a broad segment of the population or to be relied upon as a revenue base. The bipartisan "Individual Alternative Minimum Tax Repeal Act of 2005" would amend the Internal Revenue Code of 1986 to end the AMT beginning in the 2006 tax year. The Senators have indicated that they intend to work together to consider all possible meaningful solutions to the problems posed for middle-class taxpayers by the AMT.
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