November 15, 2007 12:50 PM | Permalink |
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.