Congress & Public Face Stark Choice on AMT

November 15, 2007 12:50 PM | | Bookmark and Share

Washington lawmakers are at loggerheads about how to pay for a “patch” to the Alternative Minimum Tax that would curb or eliminate the impact of the AMT on almost 23 million taxpayers in 2007. The debate has broken down almost entirely on party lines.

On one side, Democrats have already passed a bill in the House that would pay for AMT relief by closing tax loopholes that allow a tiny group of extremely wealthy investment managers to pay lower tax rates than average working families, and by narrowing loopholes that now allow multinational corporations to shift their U.S. profits offshore to avoid taxes.

On the other side, Republicans argue that the one-year AMT patch should be paid for by adding another $50 billion to the national debt. President George W. Bush is the leading advocate of this position, having promised to veto any AMT relief that is not financed by borrowing. Similarly, Bush’s allies in Congress have refused to offer any alternative other than borrowing to pay for AMT relief, even though congressional budget rules require that tax reductions be financed by offsetting tax or spending changes.

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Congress Should Stop Subsidizing Millionaires Through the Tax Code

November 7, 2007 03:07 PM | | Bookmark and Share

On November 1, the House Ways and Means Committee approved a bill (H.R. 3996) that would close the tax loophole for “carried interest” earned by buyout-fund managers. Closing this unwarranted loophole will raise $25 billion over ten years, offsetting half the cost of providing AMT relief for 2007.

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Carried Interest and Real Estate

November 7, 2007 03:05 PM | | Bookmark and Share

The Hill newspaper reported today that the Real Estate Roundtable, a trade association for real estate developers, has hired Douglas Holtz-Eakin to defend the tax loophole for “carried interest.” Holtz-Eakin was the Chief Economist on President Bush’s Council of Economic Advisors and later the director of the Congressional Budget Office.

Carried interest is the share of profits that investors pay to their fund managers to compensate them for managing the investors’ money. But fund managers have been allowed to pretend that this compensation represents profits on money they have invested themselves, thus entitling them to pay taxes at the low capital gains rate of 15 percent rather than the regular rate of 35 percent that other highly compensated workers pay.

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Congressman Rangel’s Tax Bill Would Make the Tax Code Simpler & Fairer — and the Changes Are All Paid For

November 2, 2007 12:52 PM | | Bookmark and Share

On October 25, House Ways and Means Chairman Charles Rangel introduced his proposal to address the Alternative Minimum Tax (AMT) problem and make the tax code simpler and fairer, without increasing the federal budget deficit.

On the individual tax side, the bill would entirely repeal the AMT and expand several tax provisions that particularly benefit low-income people. It would cover the $930 billion 10-year cost of the tax reductions by reducing the Bush tax cuts for the wealthiest Americans and by closing some unfair loopholes that primarily benefit the very well-off.

On the corporate tax side, the bill would sharply cut the top corporate tax rate, and pay for that by eliminating some inefficient and unfair corporate loopholes.

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