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Thursday, December 06, 2007

AMT and Tax Reform Tidbits from Congress

An Associated Press story today provides some tidbits from the debate over the alternative minimum tax (AMT) in Congress right now.

A bill to patch the AMT for a year failed because Senate Republicans opposed tax increases in the legislation. Senate Minority Leader Mitch McConnell (R-KY) declared: “Republicans will not raise taxes in exchange for blocking a tax that was never meant to be.” Good for him.

The AP also reported: “Senate Finance Committee Chairman Max Baucus, D-Mont., likened the AMT to Frankenstein, saying that ‘unless we act it will destroy the entire tax system.’” He’s absolutely right.

But the article also served up the following from Senate Majority Leader Harry Reid (D-NV) about Senate GOPers: “They find it offensive to have to pay for these tax cuts. This is a $50 billion patch. Shouldn't it be paid for? The answer is obviously yes.” Hmmm, well Senator, why not rein in government spending just a tad, rather than jacking up other taxes?

Finally, the piece closes out with the following: “Senate Republicans offered a formula for bringing the AMT issue to the floor, which included votes on amendments to eliminate the AMT entirely -- which Reid said would cost $1 trillion over coming years -- replace the tax system with a version of the flat tax and make permanent 2001 and 2003 tax cuts on capital gains and dividends.”

Now, that is a great idea. However, the Democrats were not interested. Why not? Why can’t we get bipartisanship when it comes to killing the AMT without hiking other taxes, and on moving from our current mess of a tax system to a simpler, less costly, more pro-growth tax system? Shouldn’t everyone favor that?

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