Reporting bipartisan desire to fix AMT, Wash. Post left out Bush budget's reliance on it
Research ››› ››› BEN ARMBRUSTER
An April 23 Washington Post article by staff writer Lori Montgomery on House Democrats' plan to shift the burden of the alternative minimum tax (AMT) onto wealthier Americans reported that Republicans "also advocate repealing or substantially rewriting the AMT." Yet the article did not mention that President Bush's Fiscal 2008 budget goal of, in Bush's words, "balanc[ing] the budget by 2012 without raising your taxes," relies on revenues raised from not adjusting the AMT after FY 2008. The White House's prediction that the budget will reach balance or surplus by 2012 rests, in part, on the assumption that Congress will stop raising the exemption level of the AMT -- although the Bush administration proposed that Congress increase of the exemption level again for FY 2008. Without a continuation of this temporary fix, the AMT would increase the income taxes of millions of middle-class Americans in the years to come, as Media Matters for America has noted.
From the Post article headlined "Democrats Craft New Tax Rules, New Image":
Republicans, who also advocate repealing or substantially rewriting the AMT, dismiss Democratic ideas as "class warfare." Wisconsin Rep. Paul D. Ryan, senior Republican on the House Budget Committee, said raising taxes for the wealthiest Americans would punish small-business owners. He dubbed the idea a "job killer."
Republicans also question the potency of the tax as a political issue, given that most of the people Democrats hope to rescue have yet to feel its bite.
While asserting that Republicans (whom Montgomery did not name) also want to repeal or change the AMT, Montgomery did not tell readers that Bush's budget relies on the AMT's not being repealed or altered -- the plan to eliminate the budget deficit by 2012 rests on the notion that after FY 2008 the increases in the AMT's exemption level will cease, therefore generating more revenue from middle-class earners.
As the Post article explained, when the AMT was enacted in 1970, it was designed to keep wealthy individuals from using loopholes and shelters to pay little or no income taxes. But because the AMT's exemption level is not indexed for inflation, it has in recent years threatened to affect an increasing number of middle-income taxpayers. However, Congress has spared many middle-class taxpayers from the AMT by passing temporary patches that have raised the exemption level at the cost of tens of billions of dollars in annual revenue, as the article also noted. The Bush administration's new budget proposes yet another one-year patch. But, according to a March 12 report by the nonpartisan Congressional Research Service (CRS), the administration's long-term projections assume that beyond FY 2008 the government will receive an increasing amount of revenue from the AMT as it affects more and more taxpayers. According to the CRS report, Bush's budget "stop[s] the expanding coverage of the Alternative Minimum tax (AMT) in FY 2007 and FY 2008 (but not in subsequent years)" and the $170 billion surplus in 2012 and a $249 billion surplus in 2017 in Bush's budget "assumes ... relief from the Alternative Minimum Tax (AMT) is not provided." The report explained further:
The Administration's proposals includes extending the current relief from the alternative minimum tax (AMT) for fiscal years 2007 and 2008. Without further extensions of or a permanent fix to the AMT, a growing number of middle-class taxpayers will be subject to it. The FY2008 budget estimates that "fixing" the AMT for the two years will cost $9.1 billion in FY2007 and $47.9 billion in FY2008. CBO estimates that it would cost on average about $55 billion a year over the next 10 years to index the AMT for inflation. Although the President's budget calls for fixing the AMT expansion, it does not include the five-year cost of doing so. This, in effect, increases the Administration's receipt estimates by $50 to $60 billion a year (after FY2008) above what they would be if they included an AMT fix.