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Anti-tax group wants AMT relief without pay-go rules |
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By Ian Swanson
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Posted: 06/08/07 07:26 PM [ET] |
Worried that House Democrats will raise business taxes to pay for the repeal of a tax increasingly hitting middle-income Americans, business groups have asked the Senate Finance Committee not to subject the repeal to pay-as-you-go budgetary rules.
In a June 7 letter to panel Chairman Max Baucus (D-Mont.) and ranking member Chuck Grassley (R-Iowa), the Tax Relief Coalition (TRC) insists the only fair way to repeal the Alternative Minimum Tax is to do so without offsetting tax increases, or “pay-fors.”
Members of the group include the U.S. Chamber of Commerce, the National Association of Manufacturers, the Business Roundtable and Americans for Tax Reform, which is headed by Republican activist Grover Norquist.
The Alternative Minimum Tax (AMT) was created in 1969 to ensure that wealthier Americans could not escape paying taxes. But over the years, it has captured more and more middle-income Americans because it has not been adjusted for inflation.
Both parties agree the tax is affecting more people than intended, but they differ over how to tackle the problem.
Grassley has repeatedly argued that an AMT repeal should not be subject to pay-go rules because that kind of volume of AMT revenue was never supposed to be collected in the first place. The TRC praises him for that position in its letter, which argues that imposing new taxes to pay for AMT repeal could hurt economic growth.
But Ways and Means Committee Chairman Charles Rangel (D-N.Y.) has insisted that a repeal should be revenue-neutral, which means it must be paid for by other tax increases or spending reductions. Rangel has also suggested that increasing taxes on the wealthy could offset the AMT repeal.
The TRC letter also praised President Bush’s 2001 and 2003 tax cuts, which it said spurred economic growth. Most Democrats are not inclined to extend those tax cuts when they expire in 2011.
At the beginning of the year, Baucus said he would look for possible offsets when he and Grassley introduced legislation repealing the AMT. He also said it was important to make sure the AMT repeal does not make the budget deficit worse.
If pay-go rules are enforced, the cost of repealing the AMT would be as much as $1.2 trillion over the next 10 years. Business groups have been told Rangel is looking for offsets as large as $800 billion.
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