Seeking to beat back the “mother of all tax hikes,” House Republicans brandished a non-partisan government report that said if Rep. Charles Rangel’s (D.-N.Y.) alternative minimum tax elimination plan were enacted, 113 million Americans would be forced to pay higher taxes in 2011.
According to the report, published by the Joint Committee on Taxation, which forecasts tax revenues for the government, 94 million families earning between $20,000 and $200,000 per year will pay more taxes if Rangel’s bill is passed and the Bush tax cuts expire as scheduled.
Over ten years, this would cost taxpayers $1.3 trillion, prompting Republicans to call it the “mother of all tax hikes,” or MATH for short.
Although most taxpayers would pay more money under the plan, the JCT report said 800,000 families would see a tax decrease.
The White House said in a statement released by their budget office that it would veto the bill if passed. “The administration does not believe the appropriate way to protect 21 million additional taxpayers from AMT liability is to impose a tax increase on other taxpayers.”
As Chairman of the Ways and Means Committee, Rangel has more power than anyone else to write tax policy, which must originate from the House of Representatives. The AMT was enacted in 1969 ensure that 155 wealthy households that were eligible for multiple tax breaks paid taxes. Since it was never adjusted for inflation, more and more Americans have been forced to pay the AMT each year, trapping some middle class families who earn $75,000.
Last year, nearly 4 million people were hit by the AMT at a cost of $24 billion. The AMT is scheduled to reset in 2008, which would ensnare up to 23 million taxpayers.
To avoid this problem, Rangel’s bill seeks to repeal the AMT, but under the Democrats’ self-imposed “pay-as-you-go” rules, he must make up for the revenue through a tax increase or a spending cut.
No significant spending cuts have yet been proposed.
Despite Republicans complaints, Democrats are promoting the bill as a tax cut for the middle class. By using Congressional Budget Office scores, which operate under “current policy” that assumes no additional cost to taxpayers when the Bush tax cuts expire and the AMT resets-- Rangel claims 91 million families will receive a tax cut.
The Joint Tax Committee, however, calculates future tax revenue based on “current law” which accounts for those who will pay the government more taxes when the Bush tax cuts expire and when the AMT resets.