Ways and Means Committee begins hearings on Alternative Minimum Tax Bipartisan problem requires a bipartisan solution
WASHINGTON, D.C. - The House Committee on Ways and Means Subcommittee on Select Revenue held a hearing today on the Alternative Minimum Tax. Subcommittee Chairman Richard Neal (D-MA) issued the following opening statement:
"This is the first hearing of the Select Revenue Measures Subcommittee and I think it is fitting that the subject we will discuss today is the Alternative Minimum Tax, or as some refer to it - the ATM machine for our federal government.
"The AMT is an issue that I have been battling for almost a decade - that's right. I first filed a bill trying to protect middle-income families from the reach of the AMT back in 1998.
"The Ranking Republican on this Subcommittee, my friend, Mr. English, has also filed legislation to repeal the AMT reaching back to 1999. As Ambrose Bierce once wrote, "Patience is a minor form of despair disguised as virtue." If that is true, then Mr. English and I are very virtuous men.
"The AMT is a bipartisan problem and we are seeking bipartisan solutions. It is a parallel and stealth tax system estimated to hit 23 million taxpayers this year, if we do not extend a $50 billion patch to the system.
"Can you imagine a $50 billion "patch?" For those of you who appreciate classic or older cars like I do, you know how expensive it can be to keep them up and running each year. At some point, though, you wonder if it is worth the effort.
"Many car owners simply resort to cheaper fixes, like bondo, to patch up the car. But it isn't pretty, and eventually you have to commit to a major overhaul.
"We are at that point with the AMT. The coat of bondo we've put on year after year is just delaying the inevitable conclusion that this is a system that doesn't run well.
"The testimony we will hear today on that point is quite dramatic.
"This year, a family of four earning just $66,000 could be hit by the AMT. By the end of the decade, virtually all families earning between $75,000 and $100,000 with two children will be paying higher taxes due to the AMT.
"At my direction, the Committee staff prepared for each Member today specific estimates showing the growth of AMT by Congressional District for 2007. It is important to see how this will be impacting our constituents.
"State and local taxes and personal exemptions - that is, children - are the top reasons taxpayers get pushed onto the family-unfriendly AMT.
"This system originally designed to catch millionaires who were avoiding taxes with excessive deductions has gone seriously awry. It is my intention to offer a permanent solution to AMT, and not just another coat of bondo.
"This series of hearings will assist the Subcommittee in finding and potentially recommending such a solution.
"Today's hearing will explore the history, background, and policy reasons for the AMT. At our next hearing two weeks from now, we will hear more of the first-hand experience of those impacted by the AMT.
"So, I am pleased to welcome our witnesses today. From the Treasury Department, we have Mr. Eric Solomon, the Assistant Secretary for Tax Policy, who will explain the position of the Administration, surely a partner in any ultimate solution.
"We are fortunate to also have Ms. Nina Olson, the National Taxpayer Advocate, who is exactly what her title says - OUR advocate. She has recommended for years that the AMT be repealed because of the burden it places on individual taxpayers.
"I am pleased to welcome also today Dr. Len Burman, the Director of the Tax Policy Center. If you read pretty much any article or paper on the AMT, you will see Len Burman quoted or his work cited in a footnote. We are fortunate to have his expertise today.
"And finally, I want to welcome Dr. Alan Viard, a resident scholar at the American Enterprise Institute. Dr. Viard has written on the problems in the AMT both at AEI and at his former position as an economist with the Federal Reserve Bank of Dallas.
"St. Augustine said that "Patience is the companion of wisdom. " Since Mr. English and I have already shown plenty of patience, we expect some wisdom today."