According to Tom Herman at the Wall Street Journal, if Congress does not pass legislation this year, then millions of additional Americans will be caught in the throes of the Alternative Minimum Tax (AMT). Last year, Congress was able to pass legislative relief, but the legislation was only valid for one year. This year, most financial pundits predict passage of extended relief in order to avoid a massive tax increase that would cripple millions during a severe recession and harm re-election chances for incumbents.
While some major media outlets are beginning to cover the AMT, CAIVN is way ahead of the game on this critical issue. As we point out in this detailed summary, the AMT is especially punishing to California, effectively creating a $50-$100 billion annual shortfall that is never replenished by the federal government. As a result, the golden state is forced to subsidize the rest of the nation, while its own standard of living continues to fall.
Imagine if this back-breaking tax were repealed. The $50-$100 billion in excess taxes could be utilized to balance the state budget, even before borrowing and spending cuts were considered, and taxes on all Californians could be significantly cut, providing a bona-fide economic “stimulus” and a higher standard of living.
Generally speaking, Democratic lawmakers in Washington DC have been loathe to consider repealing the AMT due to the massive revenue it generates for a myriad of government sponsored programs. Even President Bush and a largely Republican Congress failed to apply any of their tax cuts to the AMT because of its gargantuan revenue stream.
Presently, the American Bar Association tax section is strongly urging Congress to repeal the AMT. In addition, CAIVN has drafted a petition for Californians to sign, which would ask Congress to repeal the tax. Readers are urged to learn more about the AMT and to seriously consider putting their name to the statewide petition. Repealing the tax could prove a monumental victory for tax equality, fiscal responsibility, states’ rights, and sound economic policy.