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Democrats Give In To Short-Term AMT Fix

by Mike Godfrey, Tax-News.com, Washington

19 October 2007


Faced with two conflicting priorities - the need to elect a Democrat president and the impossibility of agreeing a long-term fix to the Alternative Minimum Tax with Republicans - the Democrat leadership in the shape of Charles Rangel has now given in and will agree to a short-term fix.

Twenty million voting families - that's fifty million voters - will be clobbered by the AMT this tax year if nothing is done about it. So Rep. Rangel, (D-N.Y.), Chairman of the tax-writing Ways and Means Commmittee, announced yesterday that he would support a one-year patch of the AMT. He admitted that there was no immediate prospect of bringing a comprehensive fix to the House this year.

The problem of course is 'pay-go'. Curbing the AMT would require massive tax increases in other directions. There is no chance that Democrats will close the gap with spending cuts, something that might bring the Republicans on board, so a permanent fix will fail to secure a super majority in the Senate unless it amounts to a tax reduction. And you can guess how likely that is from the Democrats in an election year.

Rangel complained: 'I have to deal with these people on the other side. They really think they're in charge of everything.'

When the House held hearings on 'tax fairness' in September, Rangel said that reforming the AMT is central to efforts at making the US tax code more equitable, but he also said that Congress must examine the tax cuts passed during the George W. Bush administrations as part of this process. Previously he had said that he would work with the Republicans on tax issues in a spirit of bi-partisanship.

In his opening statement, Rangel stated that: "As most of you know, at the beginning of this new Congress, Ranking Member McCrery and I had a number of meetings to determine the issues under our jurisdiction that would lead to bipartisan cooperation. We were very conscious of the fact that there are strong policy differences within our parties that could limit our ability to work together."

"Throughout our discussions, one thing was abundantly clear: as the Committee with primary jurisdiction over revenue measures, we have a responsibility to address the problem presented by the AMT. We have had – and still have – differences of opinion on exactly how to address this problem. However, we hope that the Republican minority would feel comfortable in having input on changes and reform to the existing code, not withstanding the fact that they may not be able to support the final package."

Rangel's hopes have proven illusory, withered by the fierce glare of electoral reality. And even a short-term fix of the AMT is going to leave a lot of blood on the carpet.


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