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November 29, 2006 Final Days of the Alternative Minimum Tax (AMT)?
In an article published in today's Financial Times House Ways and Means committee member Charles Rangel (D-NY) said that repealing the Alternative Minimum Tax (AMT) was one of his top priorities. As the 110th Congress convenes next year, Rep. Rangel is expected to become the Chairman of his committee and will likely have bipartisan support to change this tax code, as it will equate to a tax cut for millions of middle-class Americans from whom both parties hope to win favor. While this proposed change will have no direct effect on other taxes, if it is to occur the US Government could lose up to $1 trillion in tax revenues. What this means in an age of increased attention being paid to fiscal responsibility is not only that any easing of the estate tax over the next 2 years should be all but forgotten but that the discussion of relaxing Sarbanes-Oxley constraints for private companies will also quickly stop.
Assuming that the AMT is removed, both parties will try to make up some of the lost tax revenues through budget cuts; but spending cuts don't win elections. The 2 years making up the 110th congress will be dominated by both parties posturing for the 2008 Presidential election, meaning that the lost revenues from AMT will have to be made up by stricter enforcement of other standing tax codes.
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