[Congressional Record (Bound Edition), Volume 145 (1999), Part 5]
[Senate]
[Page 6700]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      THE ALTERNATIVE MINIMUM TAX

  Mrs. LINCOLN. Mr. President, today I rise to reiterate to my 
colleagues the need for immediate reform in the Alternative Minimum 
Tax. This tax, which was created to stop the very wealthy from ducking 
taxes through exemptions and tax shelters, looms in the future of 
millions of unwitting American taxpayers. Economists from the Treasury 
Department and elsewhere state that perhaps 12 million American 
taxpayers will be subject to the Alternative Minimum Tax and its higher 
rates over the next 10 years. Now these people, these 12 million, these 
are not millionaires, they are mainstream people. According to the 
Treasury Department if we do nothing to change the AMT there will be a 
638% increase in the number of taxpayers earning between $15,000 and 
$30,000 who will pay the AMT's higher rates. By 2008, 12% of the 
taxpayers paying the AMT will be earning between $30,000 and $50,000, 
29% will be earners of $50,000 to $75,000. By 2008, 45% of people 
paying the AMT, a tax created for the very wealthy, will have Adjusted 
Gross Incomes of less than $75,000. If this alone is not enough to 
alarm this body perhaps we should consider the fact that an estimated 
2000 families making over $200,000 will not pay one red cent in taxes 
this year. This is an unfair, unjustified, and inaction by this body is 
unreasonable. The AMT is out of sync with its purpose and it must be 
changed.
  There are two major factors that have brought the AMT into the lives 
of middle-income taxpayers--first, tax credits created to help families 
and aimed at promoting education and community are considered to be 
preferences in terms of AMT determination. This means that many 
taxpayers must choose between applying middle-income tax credits and 
paying the AMT or forgoing the benefits of the credits and paying 
regular income tax. The AMT is threatening to prevent millions of 
middle-income families from receiving these valuable family tax credits 
such as the dependant care credit, the credit for the elderly and 
disabled, the adoption credit, the child tax credit, and the HOPE 
scholarship. No one, rich or poor, should be forced to pay the AMT, and 
higher rates, because they use these credits.
  Second, Mr. President, the AMT has not been adjusted for inflation 
since 1993. This problem simply speaks for itself. While the cost of 
living has increased by approximately 43% since the tax code was last 
overhauled in 1986, the AMT has been adjusted only once by 12.5% in 
1993. It is an inevitability that middle-income families will be drawn 
into the AMT if nothing is done to adjust a tax provision that is 
structured like the AMT. It is very important that this problem be 
addressed and I am happy that Senator Lugar has brought this issue to 
the forefront of debate with his bill which would index the AMT 
beginning in 1993.
  We can do a great favor to ourselves and our constituents this 
legislative session by fixing the AMT. Many families are not aware of 
the AMT. Most, I'm sure don't realize that soon they may be subject to 
the AMT and its higher rates. I promise, however, that if we do not fix 
the AMT now there are 12 million people out there that will let you 
know in the coming years. 12 million people, 45% of which earning less 
than $75,000 in adjusted gross income. One-million-four-hundred-and-
forty-thousand Americans earning between $30,000 and $50,000 will be 
contacting their representatives in Washington in the coming years to 
ask, ``how can you people possibly consider me wealthy enough to pay a 
special tax for the wealthy?'' They will ask, ``why am I being punished 
for applying these tax credits that you gave me.''
  While the bulk of the bulk of the middle-income AMT damage can be 
abated by Congressional action now, the AMT is already starting to take 
its toll on a handful of middle-income voters. I received a letter from 
an accountant in the northwest Arkansas town of Harrison. Jeff Hearn, 
who has impeccable professional credentials and who I understand to be 
a very well-respected practitioner among his peers, wrote me about the 
AMT plight of one of his clients. He wrote, ``Please find enclosed the 
description of one of my clients who is a young aspiring farmer with 
chicken houses in northwest Arkansas . . . He and his wife have two 
beautiful children who both qualify for the new child tax credit this 
year . . . However, when their return was completed they were subject 
to alternative minimum tax.'' Apparently this family was forced into 
paying AMT due to a combination of the new child tax credit and excess 
depreciation arising from their budding farm operation. I believe Mr. 
Hearn said it best when he wrote, ``It seems quite unfair to me that a 
couple under the age of thirty, who are trying to build an agricultural 
business in addition to working for a living would have to pay 
alternative minimum tax when individuals who make hundreds of thousands 
of dollars are still not paying alternative minimum tax.''

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