[Congressional Record (Bound Edition), Volume 153 (2007), Part 17]
[House]
[Pages 24382-24383]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              {time}  1945
                   DEMOCRATS SEEK TO USE AMT AS WEDGE

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Indiana (Mr. Burton) is recognized for 5 minutes.
  Mr. BURTON of Indiana. Mr. Speaker, nobody wants tax increases, and a 
tax increase right now would be detrimental to the economy of the 
United States. In fact, the Treasury Secretary thinks it would be 
disastrous. It would put the economy into a tailspin.
  Chairman Rangel of the Ways and Means Committee recently tried to use 
as a wedge the AMT, the alternative minimum tax, as a way to create a 
new system down the road that would raise billions and billions of 
dollars in new taxes across this country. As a matter of fact, they 
would raise the top tax rate on capital gains to 36 percent. On people 
making over $200,000 a year, it would raise their tax rate to 36 
percent; and these tax increases would be absolutely devastating to the 
people of this country and to the economy of this country.
  Chairman Rangel in 1996 had an opportunity to vote against the 
alternative minimum tax, but he voted for it. And now he is saying he 
is against it, and he is using it as a wedge to get other taxes 
increased, which over the long term, over the next 10 years, will 
result in billions and billions of dollars of new tax increases for the 
people of this country.
  Tonight, I would like to enter into the Record some statements made 
by Grover Norquist and Bob Novak in a column he wrote, so that the 
people of this country will be aware of what is coming about. 
Explaining all of these tax changes is very difficult in 5 minutes. It 
is very difficult for the people of this country to understand. But I 
want the people of this country to know that the Democrats are planning 
to use the AMT as a wedge so they can raise taxes across the board and 
hit everybody. And it is going to hurt the economy of this country and 
hurt every American taxpayer.
  All I would like to say is that the American people need to know 
this. I hope everybody reads this. Everybody wants to do away with the 
alternative minimum tax on our side of the aisle, but we want to do it 
cleanly in one fell swoop. At least we ought to reduce it over a period 
of time so it goes away, but they are using it as a wedge so they can 
raise taxes in the next 10 years. And it will be very detrimental to 
the American economy.

                [From the New York Sun, Sept. 7, 2007.]

                 Rangel's Priority Is Repealing the AMT

                          (By Russell Berman)

       Washington.--Amid mounting opposition to a proposed tax 
     hike on the managers of hedge funds and private equity firms, 
     the chairman of the House Ways and Means Committee, Rep. 
     Charles Rangel, is making clear that his first priority is 
     fixing the widely reviled alternative minimum tax.
       Congressional Democrats have zeroed in on private equity 
     taxation in their search for new revenue sources to pay for 
     expanded health care and other domestic spending priorities. 
     Mr. Rangel convened a marathon hearing yesterday to delve 
     into an array of tax ``fairness'' issues.
       ``It has not been the goal of this committee to target any 
     tax provisions other than the AMT,'' the Harlem Democrat said 
     at the outset of the hearing, which featured 20 witnesses. 
     ``However, it is fair to say that since the AMT is such an 
     expensive revenue loser--because the revenue it brings in was 
     never expected--that naturally we have to look at the entire 
     tax code.''
       Created in 1969 to ensure that the wealthiest Americans 
     assumed at least a minimum tax burden, the AMT, because it is 
     not adjusted for inflation, increasingly is affecting middle-
     income taxpayers and has drawn criticism from both sides of 
     the political aisle. More than 23 million Americans could be 
     subject to it this year.
       ``It's the perfect storm of bad tax policy,'' the director 
     of the Urban Institute's Tax Policy Center, Leonard Burman, 
     told lawmakers yesterday, adding that the AMT is ``hideously 
     complex.''
       Yet the cost of repealing the AMT is estimated at more than 
     $800 billion over the next decade, leading to the proposed 
     tax hike on private equity. A bill sponsored by Mr. Rangel 
     and Rep. Sander Levin of Michigan would more than double the 
     tax rate that hedge fund and private equity managers would 
     pay on their investment gains, known as ``carried interest.'' 
     Carried interest is currently subject to the capital gains 
     rate of 15 percent, but the proposed change would treat it as 
     income subject to the marginal rate of as much as 35 percent.
       Citing annual incomes for managers as high as $500 million, 
     one Democrat, Rep. Artur Davis of Alabama, made no secret of 
     his view that the party should look for revenue from 
     ``individuals who are making massive amounts of money,'' 
     saying they ``frankly won't really miss the difference.''
       Economists and tax lawyers testifying yesterday debated the 
     likely impact of the tax increase on the financial sector and 
     the

[[Page 24383]]

     economy, as Republicans on the committee pressed them on 
     whether it would drive investment overseas or whether 
     managers would shift the burden to investors by charging 
     higher rates.
       A Republican congressman from Virginia, Eric Cantor, said 
     Democrats were on a ``hunt'' for new revenues and that the 
     private equity proposal ``targets one of the most innovative 
     sectors of the economy.''
       In a prepared opening statement, the ranking Republican on 
     the committee, Rep. James McCrery of Louisiana, warned that 
     the proposal ``will move us backward while the rest of the 
     world moves forward to improve their competitive position.'' 
     He added: ``I seriously doubt this proposal will become law 
     during the 110th Congress.''
       The debate over the taxation of hedge funds and private 
     equity has raged on Capitol Hill amid heightened scrutiny of 
     the $2 trillion industry and of the vast profits the firms 
     have taken in.
       The effort to raise the tax rate on carried interest faces 
     opposition from the private equity industry, and more 
     recently from the U.S. Chamber of Commerce and a coalition of 
     minority and women business groups.
       As he did at a Senate committee hearing in July, Bruce 
     Rosenblum, the chairman of the industry's lobbying group, the 
     Private Equity Council, warned that a tax hike on carried 
     interest could discourage investment and hurt American 
     competitiveness.
       The proposal has divided New York's two senators. Following 
     her top Democratic rivals in the presidential campaign, 
     Senator Clinton has come out in favor of the tax hike. 
     Senator Schumer, the third-ranking Democrat in the Senate, 
     has signaled his opposition, citing the potential harm to 
     Wall Street and New York's competitiveness worldwide. He also 
     has said targeting partnerships only in the financial sector 
     would be unfair, suggesting that a similar increase be 
     considered for partnerships in the oil and gas industries. 
     Mayor Bloomberg, meanwhile, has mostly stayed silent on the 
     issue.
       The Senate Finance Committee held its third hearing on the 
     issue of carried interest yesterday, focusing on pensions.
                                  ____


                          [September 10, 2007]

                        Confronting His Monster

                          (By Grover Norquist)

       The House Ways and Means Committee, chaired by Rep. Charles 
     Rangel, held a hearing this month supposedly about 
     simplifying the tax code for middle income families. What it 
     really was about was a monster Mr. Rangel created, fed, 
     defended, and now has turned on its master: The Alternative 
     Minimum Tax. This tax was changed around a bit throughout the 
     1970s, and found its modem form in 1982. That year, Mr. 
     Rangel voted for an AMT rate of 20 percent, which still only 
     affected several thousand taxpayers.
       In 1986, he voted to raise the AMT rate to 21 percent, and 
     several thousand more taxpayers were affected. Mr. Rangel did 
     not vote for an increase in the top rate to 24 percent that 
     followed.
       In 1999, Mr. Rangel voted against repealing the AMT beast 
     and slaying it forever. Had that bill become law, the AMT 
     would have been permanently repealed on December 31, 2007--
     this year. Instead, Mr. Rangel is forced to deal with a 
     monster of his own creation. The monster has gotten hungry. 
     According to official estimates, failure to restrain the AMT 
     will lead to 27 million taxpayers having to pay this tax. A 
     tax that would be dead, gone and buried this year if not for 
     President Clinton and Mr. Rangel.
       The irony is almost poetic. The typical AMT taxpayer lives 
     in a state like Mr. Rangel's New York, Nancy Pelosi's 
     California, and Robert Menendez's New Jersey. They have a 
     jumbo mortgage, sky-high state income taxes, a couple of 
     kids, and a six-figure income. For the most part, these are 
     the inner-suburb-urbanite, center-left voters who supported 
     the AMT authors in the first place. It is unlikely that there 
     is a thousand dollar contributor who is not paying the AMT.
       Now there is considerable pressure on Mr. Rangel to help 
     these constituents. So, he has been supporting a plan to 
     eliminate the AMT--and raise taxes on everyone else to pay 
     for it.
       He has to find a way to ``pay'' for AMT repeal because of 
     the return of PAYGO rules with the new Democrat majority. You 
     can't cut any taxes, according to these bizarre rubrics, 
     without raising other ones.
       If Mr. Rangel can't find enough tax increases to kill the 
     AMT, he can try a ``patch'' that will keep the AMT-paying 
     households at ``only'' several million taxpayers. This 
     requires fewer tax increases, all of which will be permanent, 
     in order to pay for only one year of this AMT ``patch.''
       There is a better way. Senator Grassley, the ranking member 
     on the tax-writing Senate Finance Committee, has a good way 
     of describing the AMT: It's a mistake. It is not doing what 
     it was intended to do. Instead, thanks to proper care and 
     feeding by zookeepers, the AMT beast is threatening to 
     ensnare tens of millions of American families.
       To paraphrase Mr. Grassley, ``you don't `fix' a mistake, or 
     `patch' a mistake--you correct the mistake.'' In this case, 
     that means a clean kill of the AMT. Revenue losses shouldn't 
     be counted, since the AMT mistake is yielding a windfall of 
     income never intended by policymakers.
       There is legislation to do just that in both chambers of 
     Congress. This legislation is not sponsored by the likes of 
     Mr. Rangel, who ostensibly wants to help AMT taxpayers, but 
     by conservative Republicans who want to kill the AMT because 
     it's the right thing to do. Phil English of Pennsylvania, and 
     has 54 cosponsors. In the Senate, it's sponsored by none 
     other than Mr. Grassley as S. 55. Quite simply, it would 
     fully and totally repeal the AMT immediately.
       Some prefer a more incremental approach, which is also 
     fine. Forty percent of the AMT problem would be eliminated if 
     Congress were to simply repeal the Clinton AMT that Mr. 
     Rangel supported. That is, Congress could simply undo the AMT 
     tax hike that was part of the 1993 Clinton tax increase. 
     Doing that would take the top AMT tax rate from the current 
     28 percent to a lower 24 percent.
       The ``AMT Rate Reduction Act of 2007'' does just that and 
     reduces the current top rate of 28 percent to 24 percent. 
     It's sponsored by Rep. Ed Royce of California and Eric Cantor 
     of Virginia in the House as H.R. 2253 and has 20 cosponsors. 
     In the Senate, it's sponsored by Senator Specter as S. 734.
       In politics, you have to wear bifocals--long and short 
     sight. Repealing the Clinton AMT may be the best we can do 
     this year, so supporters of full AMT repeal should also be 
     supporters of Clinton AMT repeal.
       In any event, taxpayers should see through Mr. Rangel's 
     bluster. He's not riding in on a white horse, saving the 
     middle class from the AMT. Rather, he's desperately running 
     through the countryside, trying to get everyone to forget 
     that the Frankenstein monster was one he helped create.

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