Terry Jeffrey

A good way to find Republican voters during the 2004 campaign was to look for traditional families. Nationwide, according to exit polls conducted for the major television networks, President Bush routed Sen. John Kerry 59 percent to 40 percent among married people with children.

Another good way was to look for people earning more than $50,000 per year. Bush beat Kerry 56 percent to 44 percent among those voters.

Now a massive tax increase is sneaking up on precisely the middle-class families that form the core constituency of the Republican Party, and even though the Republicans control both the White House and Congress, they may not be able to stop it.

A prodigal GOP may have already spent middle-class American families into a tax increase.

It will come in the form of the Alternative Minimum Tax.

Ever since the late 1960s, the tax code has included alternative minimum tax provisions theoretically designed to prevent the "rich" from using loopholes to avoid paying any federal income tax at all. As it now stands, people who might be subject to the Alternative Minimum Tax are required to calculate their federal tax bill twice. First, they calculate the amount they would owe under the ordinary tax. Then, they calculate the amount they would owe under the AMT. The law says they must pay the higher bill.

Three things are now pulling middle-class families into the maws of this tax. First, unlike the normal income tax, the AMT was never indexed for inflation. As wages have crept up with prices, workers making relatively less-affluent incomes have crept closer and closer to the threshold that will subject them to the AMT.

Secondly -- and ironically -- the cuts in the income-tax rates secured by President Bush are causing more middle-class families to have lower tax bills under the ordinary tax, thus exposing them to a potential AMT liability that would essentially seize the income that the Bush tax cuts would let them keep.

Thirdly, the AMT does not allow deductions for dependent children, state income taxes or property taxes. Under AMT, more children means more federal taxes, and a more valuable house means more federal taxes.

Thus, the AMT is now homing in on suburban married couples with children who pay property taxes on houses large enough to accommodate old-fashioned families.

At a hearing of the Senate Finance Subcommittee on Taxation last May, government analysts from both the executive and legislative branches addressed this fact.

"(T)he AMT is not fair," said Robert J. Carroll, the deputy assistant treasury secretary for tax analysis. "It disproportionately affects large families."


Terry Jeffrey

Terence P. Jeffrey is the editor-in-chief of CNSNews

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