[Congressional Record Volume 147, Number 18 (Thursday, February 8, 2001)]
[Senate]
[Pages S1205-S1206]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               AMT REFORM

  Mrs. LINCOLN. Mr. President, yesterday Senator Lugar and I joined 
forces with a bipartisan group of Senators to disarm one of the 
quickest ticking time bombs hidden away in our tax code. Senator Lugar 
and I were joined by Senators Breaux, Kyl, Landrieu, Cochran, and Bayh 
in introducing a bill to permanently provide tax protection for 
millions of taxpayers from the Alternative Minimum Tax.
  The AMT was created to reduce the ability of some individuals to 
completely avoid taxation by using tax preference items excluded from 
the income tax. The AMT was first established in 1969 after the 
Secretary of Treasury testified before Congress that 155 high-income 
individuals had paid no federal income taxes in 1966. Over the years 
the AMT has been amended several times and has gone from what was 
essentially a surcharge on tax preference items to the current system, 
which is generally considered a separate tax system that parallels the 
regular individual income tax but having its own definitions of income, 
its own rates, and its own problems.

[[Page S1206]]

  There are two basic problems with the AMT. Number one, there are many 
items considered in AMT determination that simply should not be there, 
and number two, the exemption amounts are not indexed. Last Congress I 
took the lead on combating the former problem, and Senator Lugar took 
the lead on the latter. This year we have come together in a bipartisan 
way to fight both.
  There are several tax credits, including the child tax credit which 
President Bush proposes to double and the Adoption Credit which Senator 
Landrieu is working so hard to revise and expand, that are considered 
preference items when determining AMT liability. These personal credits 
along with the standard deduction and the personal exemption can hardly 
be considered luxury preference items and including them in the AMT 
calculation goes against the spirit of the reform which brought about 
the AMT. The bill which I have introduced will permanently remove the 
nonrefundable personal credits, the standard deduction and the personal 
exemptions from the AMT formula. In short, Mr. President, no one should 
be forced into paying higher taxes because they took the Hope 
Scholarship Credit, the deduction for their spouse and dependents, or 
because they take the credit for the dependent care services necessary 
for keeping a job! It is time to permanently protect working families 
from having to choose between higher taxes and family credits.
  The second provision of this bill increases the individual exemption 
amount for the AMT, and indexes it from here on out. This indexing will 
make sure that limits we set stay economically accurate as inflation 
reduces the value of the exemption over time.
  I believe this plan is a comprehensive and bipartisan way to take on 
this issue and put it to rest for the long term. Even if we do not 
choose this approach, which I believe is the most effective and cost 
effective approach, something clearly has to be done now or the AMT 
will explode in the coming few years. According to research by the 
Joint Tax Committee and the Treasury Department, the number of 
taxpayers affected by the AMT is expected to balloon from 1.3 million 
in 2000 to 17 million by 2010. That is almost 16 percent of all taxable 
returns! A return, by the way, which takes on the average 5 hours and 
39 minutes to fill out. Of those 17 million taxpayers, 4.5 million are 
expected to be taxpayers who have to give up part of their tax credits 
to avoid the AMT tax liability. That is wrong and hard working middle-
income families deserve better.
  I ask my colleagues to take a fair look at this legislation and let's 
work together to put the AMT back into reason.

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