Permanently Eliminate the AMT
By Sen. Gordon Smith
Congress continues to hit the snooze button on reforming the Individual Alternative Minimum Tax. In 2004, Oregon ranked 11th in the nation in percentage of taxpayers subject to the AMT. Congress should do more than pass a temporary fix for the AMT for the 2007 tax year; they should permanently eliminate this taxpayer nightmare.
This spring, I was one of forty-four Senators pushing to permanently repeal the AMT on the floor of the U.S. Senate. Regrettably, the legislation failed to move, but I have co-sponsored other efforts to repeal the AMT. I have also co-sponsored the AMT Penalty Protection Act to shield taxpayers from penalties.
The Alternative Minimum Tax was enacted by Congress in 1969 to ensure that high-income Americans paid their fair share of taxes. The idea was that no taxpayer should avoid paying taxes by using exclusions, deductions or credits. With the creation of the AMT came a tax structure parallel to the regular income tax, but with a different definition of income, tax rates, allowable deductions, exemptions and credits. Taxpayers calculate both their regular and AMT tax liabilities, then pay the higher tax.
Initially, the AMT applied to fewer than 20,000 higher-income taxpayers. The AMT was not indexed for inflation, and as a result, an increasing number of middle-income Americans are paying AMT. Today, there are over 48,000 Oregonians paying AMT. If Congress does not take action to correct or repeal the AMT before the end of 2007, upwards of 20 million middle-income households nationwide will find themselves paying AMT. Its time for Congress to act and eliminate this expensive and unfair tax.