[Congressional Record Volume 143, Number 129 (Wednesday, September 24, 1997)]
[Extensions of Remarks]
[Page E1833]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 ON INTRODUCTION OF LEGISLATION TO MAKE NONREFUNDABLE PERSONAL CREDITS 
 CREDITABLE AND THE STANDARD DEDUCTION AND THE DEDUCTION FOR PERSONAL 
                 EXEMPTIONS DEDUCTIBLE FOR AMT PURPOSES

                                 ______
                                 

                        HON. BARBARA B. KENNELLY

                             of connecticut

                    in the house of representatives

                      Tuesday, September 23, 1997

  Mrs. KENNELLY of Connecticut. Mr. Speaker, today I am introducing 
legislation to make good on a promise we made the American people. The 
recently enacted Taxpayer Relief Act of 1997 promised American families 
both an education and a family credit. Unfortunately for many American 
families these credits will turn out to be phantom credits.
  Many average families will be thrown into the alternative minimum tax 
[AMT] simply because they take advantage of the new child and education 
credits. This happens because individuals pay the greater of regular 
tax reduced by nonrefundable credits or the AMT not reduced by 
refundable credits. And because both the family and the education 
credit are added back for purposes of the AMT, families with children 
are more likely to be thrown into the AMT simply by using these 
credits. In the case of families with three or more children young 
enough to be eligible for the family credit, the bill permits the 
family credit against the employee share of FICA so that the minimum 
tax is no longer a problem for those families. However, it will be an 
unpleasant surprise for many others.
  In 2002, 2 million families will be thrown into the AMT because of 
the family credit alone. For example:
  A single mother with two children in daycare with $51,400 in gross 
income would lose all of her child credit plus $141 of her dependent 
care credit in the year 2000 because she gets thrown into the AMT.
  A two-parent family with three children, including one college 
freshman and $67,000 in gross income would lose $1,477 of their $2,500 
combined family and HOPE scholarship credit because they get thrown 
into the AMT.
  A two-parent family with two children in college and $64,100 in 
income would lose $723 of their Hope scholarship credit because they 
get thrown into the AMT.
  This simply makes no sense. Therefore, today I am introducing 
legislation which would make nonrefundable personal credits, including 
the dependent care, child and education credits, creditable and the 
standard deduction and personal exemptions deductible for AMT purposes.
  The AMT was meant to assure that sophisticated taxpayers couldn't 
zero out their taxes. It was never intended that your children would 
throw you into the AMT. I would urge my colleagues to support this 
important piece of legislation and keep our promises to the American 
people.

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