[Congressional Record (Bound Edition), Volume 147 (2001), Part 1]
[Extensions of Remarks]
[Page 1441]
[From the U.S. Government Publishing Office, www.gpo.gov]



        INTRODUCTION OF THE MAKE TAX CREDITS WORK--FIX ALTERNA-
                            TIVE MINIMUM TAX

                                 ______
                                 

                          HON. RICHARD E. NEAL

                            of massachusetts

                    in the house of representatives

                       Tuesday, February 6, 2001

  Mr. NEAL of Massachusetts. Mr. Speaker, I am introducing today badly 
needed legislation to make permanent the temporary provision of current 
law that allows all nonrefundable personal tax credits to be used 
against the alternative minimum tax. These credits include the child 
credit, the adoption credit, the HOPE credit, the lifelong learning 
credit, and the dependent child care credit.
  I have introduced this bill in the two previous Congresses, H.R. 4489 
and H.R. 1097. In 1998 Congress enacted a 1-year provision to solve the 
problem, and in 1999 Congress enacted a 3-year solution. Now is the 
time to permanently fix the problem, if only because the problem will 
get more serious and the revenue cost will increase every year we 
delay. According to the Joint Committee on Taxation, a permanent 
solution to this problem enacted in 1999 would have cost $6 billion 
over 2000-2004, and $29.6 billion over 2000-2009. This rapid escalation 
in cost demonstrates why it is important to resolve the problem now. It 
also indicates how rapidly this provision will affect American families 
if it is not solved permanently.
  To date, two messages have come out of the Bush administration on 
this issue. The first message is that the alternative minimum tax is a 
problem to be thought about. The second message is that Congress ought 
to fix it. Refusing to face this problem directly, and taking 
responsibility for helping resolve it, is a recipe for continued 
temporary solutions in an era where budget surpluses demand real tax 
solutions to real tax problems. I have offered twice to work with the 
administration on permanent solutions, and I continue to hope a 
permanent solution will be incorporated into its tax proposals.
  Without these temporary solutions, current law would not allow 
personal tax credits to be used against the alternative minimum tax. 
Since taxpayers must pay the higher of their regular federal income 
tax, or the alternative minimum tax, many families find some or all of 
these credits disallowed by the AMT. In 1998 the Department of the 
Treasury estimated that over 800,000 families would have been denied 
the full amount of the child credit or the education credits, and that 
the number would increase annually.
  According to the Internal Revenue Service, the estimated average time 
it takes to fill out the alternative minimum tax form was 5 hours and 
39 minutes. It would, of course, take much longer for hundreds of 
thousands of taxpayers who may be forced to fill out this form for the 
first time as a result of the credits Congress offered them in the name 
of child care, adoption, and education. And I cannot think of anything 
that would produce greater cynicism on the part of the American people 
than not enacting a permanent solution to this problem.
  Mr. Speaker, I have never thought of this issue as a partisan issue. 
I have worked with the former chairman of the Ways and Means Committee 
Mr. Archer, and with the chairman of the Oversight Subcommittee Amo 
Houghton, to bring this issue to the attention of Members of Congress, 
the administration, and the American people. I will continue to pursue 
all avenues during the 107th Congress to defuse this hidden time bomb 
permanently.
  Finally, Mr. Speaker, let me simply say that the AMT presents 
additional challenges to Congress. The interaction of the AMT and the 
nonrefundable personal tax credits is only the most immediate, most 
crucial, problem. A second problem is that over the next decade the 
fact that the AMT is not adjusted for inflation while the regular 
federal income tax is adjusted, will push millions of families into the 
AMT and that should be dealt with as soon as possible. A third problem 
exists because the AMT will slash much of the tax relief that will be 
promised by President Bush this week, if it is not dealt with within 
the Bush proposals. I, and others, have proposed various solutions to 
these problems and I will continue to press for solutions to all the 
problems presented by the AMT. But the most immediate problem is that 
caused by the interaction of the AMT and nonrefundable credits, and 
that must be dealt with no matter what this year.

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