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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
May 23, 2005
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 It was originally enacted in 1969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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