AMT patch is good
Dallas Morning New: While Congress is dealing with the inconvenient truth of Wall Street going south, we’re glad legislators are owning up to another unpleasant reality: The alternative minimum tax is squeezing middle-class taxpayers.
Congress designed the AMT to catch the ultra-wealthy, whose loophole-sniffing lawyers made sure their clients paid little or no taxes. Because of technicalities built into the law years ago, the AMT today snares some middle- to upper-middle-class workers who never considered themselves wealthy. Come tax time, millions wake up to a larger tax bill than they could have imagined.
On Tuesday, the Senate passed a plan to temporarily correct the problem, which the House worked on Wednesday. Both chambers want greater taxpayer exemptions, which mean the AMT will hit fewer Americans. The relief should shield about 24 million of them from, on average, $2,000 tax bumps, said Sen. Charles Grassley, R-Iowa.
Bipartisanship
He should know. He is the Republicans’ ranking Finance Committee member. We particularly like that he worked with Max Baucus, the Democratic committee chairman, to craft this bill. Their effort shows that Washington, when so inclined, can move beyond the typical partisan sniping.
Yet this AMT patch doesn’t solve the problem. It only postpones the day of reckoning.
Ultimately, Congress must reform this tax so it doesn’t crash down on innocents year after year like a runaway elevator in a sci-fi movie. Rep. Jeb Hensarling, the Dallas Republican, has called for a two-tiered flat tax. Others want to index the AMT so it hits only the truly wealthy, for whom it was created.
We’re not here to identify the best answer, only to point out that Congress needs to find one in the next administration. What the rest of us need to realize is that any solution will cost big bucks, in the several hundred billions of dollars.