WHITE PLAINS, NY – While the President’s Advisory Panel on Tax Reform considers measures to change the way Americans are taxed, three New York Members of Congress are urging a renewed focus on reforming the Alternative Minimum Tax.  This tax was created to ensure that the richest Americans paid their fair share but is increasingly becoming a burden on middle-class families.  Representatives Nita Lowey (D-Westchester/Rockland), Steve Israel (D-Long Island) and Tim Bishop (D-Long Island) wrote to the Advisory Panel this week to point out the flaws in the current AMT and outline a reform proposal.

“The AMT was designed in the 1960s to ensure that the wealthiest Americans still paid their fair share of taxes,” said Lowey.  “But because the AMT isn’t indexed to inflation like the regular tax code, it treats today’s middle-income families like yesterday’s ultra-wealthy. Indeed, the alternative minimum tax has become nothing short of a mandatory maximum tax.  It now harms the very families it was created to protect and will hurt millions soon if we don’t act fast.”

“Taxpayers in districts like ours, where incomes are necessarily higher to meet the steep cost of living, are getting hit hard by the AMT,” Israel said.  “Their money might go a long way if they lived in Crawford, Texas, but in New York they aren't rich and they shouldn't be taxed as if they were.  We need to fix the AMT so that it stops snagging middle class taxpayers.”

"The Alternative Minimum Tax has become the enemy of hardworking, middle-class families across Long Island and throughout the nation," stated Bishop.  "Long Islanders bear a significant tax burden and reforming the AMT must be a priority for the President and Congress. I urge the Administration to address this issue immediately and provide real tax relief to the middle class."

The AMT was initially enacted in 1969 following revelations that 155 people with adjusted gross income above $200,000 had paid nothing in federal income taxes on their 1967 tax returns.  In inflation-adjusted terms, those 1967 incomes would be roughly $1.17 million in today’s dollars. 

While the regular tax code has accommodated cost-of-living increases and salary hikes over the years, the AMT has not.  Under current law, the AMT exemption is scheduled to fall from $58,000 to only $45,000 at the end of this year, at which time the number of families affected will balloon from 3 million to 21 million.

In the letter to the President’s Advisory Panel, Lowey, Israel and Bishop outlined a strategy to ensure that the AMT does not burden the middle class while preserving fairness in the tax code.  They pointed to H.R. 1535, the Israel-Lowey bill which would raise the current income exemption to $100,000 immediately and indexes it to inflation thereafter, ensuring that no family with an income below $100,000 could be penalized by the AMT.