The $50 Billion Hole
The Washington Post reports that the Senate has overwhelmingly passed a patch for the Alternative Minimum Tax, blowing a $50 billion hole in the Democrat's stone tablet promise to not pass any spending or tax measure that would add to the deficit - the much vaunted PAYGO promise.
Eleven months after adopting stringent new rules aimed at reining in the federal deficit, the Senate last night shrugged off its pledge of fiscal rectitude and overwhelmingly approved a measure to spare millions of families from the growing reach of the alternative minimum tax without providing an offsetting tax increase.
The Senate's 88 to 5 vote blew a $50 billion hole in the Democrats' promise not to pass any spending or tax measure that would add to the deficit. The outcome brought a furious response from conservative "Blue Dog" Democrats in the House, who assailed the Senate and vowed to block passage of any tax measure that would add a cent to the federal debt.
"We run for reelection every two years. They run every six years," fumed Rep. Mike Ross (D-Ark.). "Don't try to tell me the Senate can't take a tough vote."
Despite the heavy toll the AMT exacts on some middle-class taxpayers, Congress has been loath to repeal it outright because that would leave a trillion-dollar hole in the federal budget over 10 years. Instead, successive Congresses have opted for one-year "patches" that hide the long-term cost. The Senate-passed bill would spare the middle-class households touched by the AMT an average of $2,000-per-family increase on 2007 income taxes and would ensure that refunds of as much as $75 billion would be distributed without delay.
The AMT was designed in the 1960s to prevent the very rich from using deductions, credits and other shelters to avoid paying taxes, but its income thresholds did not rise with inflation. Taxpayers are not hit by the AMT based on income alone. The number and type of deductions and credits they take also help determine whether they will be forced into the alternative taxation system. Because of rising incomes, the tax's bite is expected to expand to more than 30 million households in 2010. Last year, the AMT affected 3.8 million mostly well-off households.
This will set up a very difficult confrontation for the Democrats. Yesterday, 31 of the so-called Blue Dogs vowed openly that they would not support any conference bill that does not provide an offsetting tax hike. The AMT was crafted by Democrats and now the Frankenstein's monster is coming back for them. This should be fun to watch. Pass the popcorn.
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Right Voices » Blog Archive » Harry Reid Fails Yet Again — Friday, 7 December , 2007 @ 5:09 pm
By FedUp, Friday, 7 December , 2007 @ 12:18 pm
Excuse me??? “adopting stringent new rules aimed at reining in the federal deficit, “?? They haven’t kept any other pledge OR law, why would they start worrying now? Oh, I get it… it would benefit people like me…
They are definitely morons! It would be nice to see them suck it up for a change, but, on the other hand… if they don’t WE the people are going to be even more seriously pi$$ed!
Now… if they’d give up some of their pork… oh… right!
By Sylvia, Friday, 7 December , 2007 @ 12:29 pm
AMT is a real bear to calculate correctly, and with the constantly shifting sands it’s hard to project estimates corretly, too. There must be a better way…