Tags: US | Alternative | Minimum | Tax

Dem, GOP Lawmakers Vow to Spare Millions from AMT

Tuesday, 09 Nov 2010 03:10 PM

 

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WASHINGTON (AP) — Leaders from both parties in Congress vowed Tuesday to spare more than 21 million taxpayers from significant tax increases when they file their returns next spring by adjusting the alternative minimum tax before the end of the year.

The tax was first enacted in 1969 to make sure higher-income taxpayers could not use deductions and credits to avoid paying any federal income tax. The income limits, however, were not indexed for inflation, so Congress routinely fixes the AMT each year to spare millions of middle income taxpayers from tax increases that would average about $3,900.

Congress hasn't made the change for 2010. In a letter to the IRS, Democratic and Republican leaders of the tax-writing congressional committees said they would address the issue after Congress returns next week in a lame-duck session.

The letter is a bipartisan gesture on taxes just days before Congress takes up the much larger issue of extending tax cuts enacted under former President George W. Bush. The Bush tax cuts expire at the end of the year. Congress returns next week, and the tax cuts are among the top issues lawmakers will face.

The alternative minimum tax is a much more routine, but nevertheless important, issue. Patching it for one year would cost about $70 billion, according to congressional estimates.

"We will work to craft the AMT provision so that, in the aggregate, not one additional taxpayer faces higher taxes in 2010 due to the onerous AMT," said the letter, written by Sen. Max Baucus, D-Mont., Sen. Chuck Grassley, R-Iowa, Rep. Sander Levin, D-Mich., and Rep. Dave Camp, R-Mich.

"We urge the Internal Revenue Service to take all steps necessary to plan for changes that would be made by the legislation."

Baucus heads the Senate Finance Committee and Grassley is the ranking Republican; Levin heads the House Ways and Means Committee and Camp is the ranking Republican.

For 2009, the alternative minimum tax affected individuals making more than $46,700 and married couples making more than $70,950. The four lawmakers said they will write legislation that essentially updates for 2010 the incomes levels for inflation.

Without a fix, taxes would go up for individuals making as little as $33,750, and married couples making as little as $45,700.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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