Unless Congress Acts, AMT Will Hit Middle-Income Families
October 19, 1999
When the alternative minimum tax was imposed in 1986, it was never meant to impact middle-income families. Its purpose was to ensure that wealthy people who use shelters still pay some taxes.
Problem is, it was never indexed for inflation and many families making incomes in the $50,000 to $100,000 range are about to face its effects. Political observers say these taxpayers will be outraged if disputes between the President and Congress scuttle efforts to correct the error.
- Lawmakers of both parties say they want to pass a short-term fix that would permit average families to avoid the tax by exempting child or education credits from its scope.
- Congress did that last year, but it was operational for 1998 only.
- As many as 1 million taxpayers could find they owe more money than expected -- an average of about $900.
- Unless Congress and the White House cooperate soon, the Internal Revenue Service will have to print up two sets of 1999 1040 forms, instructions and worksheets -- at an added cost of up to $11.5 million.
The tax cut bill Republicans passed this year would have phased out the AMT over the coming decade and exempted the family credits immediately. But President Clinton vetoed that bill.
House Ways and Means Chairman Bill Archer (R-Texas) then pushed through his committee a smaller bill that would permanently exempt the family credits from the minimum tax. But that bill hasn't been brought to the House floor and Clinton has threatened to veto that one also.
Source: William M. Welch, "Political Gridlock Could Bring on Tax Turmoil," USA Today, October 19, 1999.
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