The U.S. House of Representatives should follow the Senate’s lead and reform the alternative minimum tax before it catapults 23 million middle-class Americans into a penalty bracket originally crafted to snag a handful of tax-dodging millionaires.
After 11 months of pointless bickering, the Senate on Thursday approved, 88-5, a one-year, stopgap measure that temporarily indexes the minimum tax for inflation. The House needs to follow suit next week or early filers will face long delays getting their tax refunds — which averaged $2,291 last year, according to the Internal Revenue Service.
The IRS has to deal with the law as it is when preparing tax forms and computer programs for the upcoming filing season. The IRS has thus been forced to hold off on some forms already. Given the lead times in printing and distributing forms, it will have to delay the start of its filing season, set to kick off on Jan. 14, if Congress fails to pass legislation by the end of next week.
Every day Congress dawdles after that only makes the problem worse. If Congress is still clowning around on AMT by mid-February, 38 million refunds worth a total of about $87 billion are expected to be delayed, according to the IRS Oversight Board.
The AMT was originally created in 1969 to prevent just 155 wealthy people from “zeroing out” their tax liability through excessive credits and deductions. But failure to adjust it for four decades of inflation now means it would hammer millions of ordinary Americans if imposed in its current form. That’s not really likely to happen, since the resulting public outrage would force a lot of congressmen to trade their cushy jobs and benefits for whatever employment is available at the local car wash.
Neither party wants that outcome. But while House Democrats did pass a bill to fix the AMT, they also insisted on paying for what they are characterizing as a “tax cut” by passing offsetting tax increases in other parts of the budget. Republicans, correctly in our view, blocked that approach in the Senate and forced approval of a straight AMT relief bill.
In general, The Post has supported the Democratic leadership’s pay-as-you-go rules. Given the huge federal deficit, we do believe that new tax cuts and/or new spending should be offset by tax increases or spending cuts elsewhere. But AMT relief isn’t a “tax cut” — it merely avoids a huge, and grossly unfair, tax increase.
Stop playing games, Congress. Pass AMT relief now or face the wrath of every middle-class taxpayer.
