[Congressional Record (Bound Edition), Volume 147 (2001), Part 2]
[Extensions of Remarks]
[Page 2911]
[From the U.S. Government Publishing Office, www.gpo.gov]



INTRODUCTION OF A BILL TO REDUCE THE ALTERNATIVE MINIMUM TAX RATE TO 25 
                                PERCENT

                                 ______
                                 

                          HON. PHILIP M. CRANE

                              of illinois

                    in the house of representatives

                         Tuesday, March 6, 2001

  Mr. CRANE. Mr. Speaker, today I am introducing three pieces of 
legislation to refine the tax proposal put forward by President Bush. 
Let me state at the outset that I fully support President Bush's tax 
proposal as he laid it out. I think it is appropriate for the times and 
well-designed. Even so, there is no legislation or proposal that cannot 
be improved upon. And so I offer these three bills in this spirit and 
in the belief that the President in all likelihood would and should 
support them.
  The first bill I am introducing takes as its starting point the 
income tax rate reductions proposed by President Bush, phased in over 
ten years. I have included these rate reductions to provide the context 
for my proposed refinement, which is to reduce the tax rates of the 
individual Alternative Minimum Tax (AMT) from 26 and 28 percent to 25 
percent, consistent with the reduction of an individual income tax rate 
under the Bush proposal from 28 to 25 percent.
  The individual (AMT) is a complex and unfortunate aspect of our tax 
code. Most taxpayers are blissfully unaware that they are, in fact, 
subject to two federal income taxes--the regular income tax and the 
AMT--and that their annual tax liability is the greater of the two 
produced by these two systems. The modern AMT was intended to ensure 
that certain upper-income taxpayers paid a significant amount of tax. 
It was to achieve this objective by denying to these taxpayers certain 
deductions and exemptions available under the regular income tax. For 
example, in addition to denying taxpayers any of a set of 
``preferences'', such esoteric items as excess intangible drilling 
costs and a deduction for pollution control facilities, the AMT denies 
taxpayers the personal exemptions allowed under the regular income tax, 
and denies them a deduction for State and local taxes paid.
  For a variety of reasons, the number of taxpayers, especially middle-
income families, subject to the individual AMT has been soaring in 
recent years, and this trend is expected to continue. Ideally, the AMT 
should be repealed outright. The abuses the AMT was established to 
address have long since been eliminated from the income tax. Until full 
repeal becomes timely, however, we must at least ensure that matters do 
not worsen.
  In the context of the Bush income tax rate reductions, the AMT poses 
additional problems because these rate reductions do not extend to the 
AMT rate. This means that many taxpayers currently subject to the AMT 
suffer the additional wrong of being excluded from any tax relief under 
the Bush program. This is patently unfair as many Members on both sides 
of the aisle have pointed out.
  It also means that many more taxpayers will see far less tax relief 
than is intended. This would occur for those taxpayers whose current 
regular income tax liability barely exceeds their AMT liability. Once 
the Bush rate reductions are put into effect, these taxpayers' regular 
income tax liability will drop below their AMT liability. They will 
still receive some tax relief, to be sure, but far less than they 
expected and far less than was anticipated when the Bush proposal was 
developed.
  The new income tax rate structure suggested by President Bush starts 
at 10 percent, and then rises to 15 percent, 25 percent, and finally 33 
percent. The current individual AMT has two rates of 26 and 28 percent. 
My bill reduces the AMT rates to a single rate at 25 percent to be more 
consistent with the President's proposed rates. Thus, my proposal would 
reduce marginal tax rates for AMT filers so they, too, have a better 
incentive to work, save, and invest. Just as important, however, under 
my bill current AMT filers and near AMT filers would join with all 
other taxpayers in enjoying significant tax relief.
  This legislation is sound tax policy. By any measure it increases 
fairness in the tax code. And it deserves the support of this Congress.

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