[Congressional Record Volume 145, Number 39 (Thursday, March 11, 1999)]
[Extensions of Remarks]
[Pages E404-E405]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


              PERMANENTLY FIX THE ALTERNATIVE MINIMUM TAX

                                 ______
                                 

                          HON. RICHARD E. NEAL

                            of massachusetts

                    in the house of representatives

                        Thursday, March 11, 1999

  Mr. NEAL of Massachusetts. Mr. Speaker, today I am introducing 
legislation to permanently fix the tax problem caused by the fact that 
the new tax credits for education and children are limited by the 
alternative minimum tax (AMT). Consequently, more and more average 
Americans who use the dependent care credit, the new child credit, the 
HOPE credit or the lifelong learning credit, will be forced to fill out 
the complex alternative minimum tax form. Even worse, a growing number 
of Americans will have all or part of these credits denied by the 
interaction of the regular federal income tax and the alternative 
minimum tax.
  This is not a new issue. Last year I introduced legislation, H.R. 
4489, to permanently fix this problem. Once it was clear that permanent 
legislation would not pass, I introduced H.R. 4611 to correct this 
problem for 1998. This one year temporary ``fix'' did pass Congress 
last fall as part of the Omnibus Appropriations Act. This year, the 
Administration's budget includes a two year ``fix'' of this problem. 
This is simply not enough. This is a permanent problem; it demands a 
permanent solution.
  Specifically, my legislation allows personal nonrefundable credits to 
be used against AMT liability. Nonrefundable credits include the child 
credit, the HOPE and lifetime learning credits, the dependent care 
credit, and the adoption tax credit. In addition, the bill eliminates 
the complex interaction of the partially refundable family credit with 
the AMT. In doing so, the bill would eliminate a penalty faced by large 
families.
  Under current law, the total allowable amount of nonrefundable 
personal credits may not exceed the amount by which the individual's 
regular income tax liability exceeds the individual's tentative minimum 
tax. For families with three or more children, an additional refundable 
child credit is provided and this is reduced by the amount of the 
individual's minimum tax liability. This requires all taxpayers who 
claim the child credit with incomes above $45,000 for joint filers and 
$33,750 for single filers to make at least a rudimentary minimum tax 
calculation.
  The Department of the Treasury estimated that in 1998, without the 
one year ``fix'', eight hundred thousand taxpayers who are entitled to 
the child credit or the education credits would have been denied the 
full benefit of these credits by the AMT.
  In order to eliminate the complexities of the AMT in a revenue 
neutral manner, this bill reduces the income phase-outs for the child 
credit from $110,000 to $91,000 on a joint return, and from $7,500 to 
$60,000 for single filers.
  According to the IRS, the estimated average time it takes to fill out 
the alternative minimum tax form is 5 hours and 39 minutes. It would, 
of course, take much longer for hundreds of thousands of taxpayers who 
may be forced to fill this form out for the first time as a result of 
the credits Congress offered them last year in the name of child care 
and education.
  And to show how truly perverse this provision is, the interaction 
between the AMT and the partially refundable child credit will result 
in a tax increase on 177,000 large families if the Republican 10 
percent across the board tax cut was passed into law. Some might 
respond that they intend to fix this problem later, but that is exactly 
the type of thinking that put us in this situation to begin with.
  Mr. Speaker, this bill is ``must pass'' legislation, and it must be 
passed on a bipartisan,

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revenue neutral, permanent basis. I hope it will be.

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