[Congressional Record (Bound Edition), Volume 156 (2010), Part 8]
[Senate]
[Pages 10638-10640]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        ALTERNATIVE MINIMUM TAX

  Mr. GRASSLEY. Mr. President, I wish to bring to my colleagues' 
attention the fact that we have this problem we deal with too often 
called the alternative minimum tax. I bring it to my colleagues' 
attention.
  Last week, I had an opportunity to address my colleagues on the 
unfinished tax legislative business. These four items are the 
unfinished business to which I was referring. The legislation before 
the Senate deals with only one but, of course, an important piece of 
the unfinished legislative business. These tax extenders are on their 
second legislative stop through the Senate.
  As the chart shows, the tax extenders, which are overdue by almost 
half a year, are not alone in that unfinished business. There are three 
other major areas of unfinished business. As we can see from the chart, 
we have the death tax with which we have not dealt. Another area is the 
2001 to 2003 tax rate cuts and family tax relief package. Then the 
third area is the AMT patch, the alternative minimum tax.
  Over the past few years, the AMT is frequently a subject of many of 
my addresses to my colleagues. I intend to keep talking about the AMT 
until this Congress actually takes action on reforming the AMT.
  Instead of taking action, Congress this session has done absolutely 
nothing, and the problem continues to get worse for at least 26 million 
American families--let me emphasize middle-class American families--who 
will be caught in this AMT trap and, as a matter of fact, are now 
already caught.
  Those being caught or are caught are the families who make estimated 
tax payments and who will be making their second payment this very day.
  Last year, in 2009, a bit over 4 million families were hit by the 
alternative minimum tax. I think this was 4 million families too many, 
but it is considerably better than the more than 26 million additional 
families who will be hit this year in 2010 if Congress does not take 
action.
  The reason we are experiencing this large increase this year is that 
over the last 9 years Congress has passed legislation that would 
temporarily--and only temporarily--increase the amount of income exempt 
from the alternative minimum tax. These temporary exemption increases 
have prevented millions of middle-class American families from

[[Page 10639]]

falling prey to the alternative minimum tax until right now.
  While I have always fought for these temporary exemptions, I believe 
the AMT ought to be permanently repealed. One reason I have previously 
given for permanent repeal is that it may be difficult for Congress to 
revisit the alternative minimum tax on a temporary basis every year. Of 
course, this current situation, now 6 months into this year, proves me 
right. Congress has yet to undertake any meaningful action on the 
alternative minimum tax.
  The budget resolution, passed well over a year ago, provided revenue 
room for a short-term extension of the alternative minimum tax patch. 
That was a lot less than what President Obama's budget did, which made 
the patch permanent.
  On this point, since too often people think I do not agree with 
President Obama enough, this is one point where I believe the tax 
policy of President Obama has it exactly right.
  About 18 months ago, much to the criticism of some on the other side, 
I made the 2009 AMT patch an issue in the economic stimulus 
legislation. The reason I did is that 24 million middle-class families 
would have, on average, paid $2,400 more in income taxes for 2009 if 
the patch had been abandoned. For those 24 million people, paying 
$2,400 more into the Federal Treasury would have been a real hurt. My 
2009 AMT patch amendment was adopted in the stimulus legislation by the 
Finance Committee. That was 18 months ago.
  Despite assurances the AMT relief is an important issue, nothing has 
actually been put forward as a serious legislative solution this year. 
Again, we can see the checklist chart. There has been no House 
committee markup or floor action, no Senate committee markup or floor 
action. This year is almost half done. A theoretical discussion is not 
a substitute for real action, to which anyone making a quarterly 
payment today will attest.
  I am hopeful I can get folks on Capitol Hill rethinking about the AMT 
and realize that it is a real problem right now. Everyone seems to 
agree that something needs to be done quickly, but the discussion does 
not go any further than just discussion.
  The second quarterly payment is due today. Today taxpayers across the 
country are under a legal requirement to pay their estimated taxes, and 
with it the additional money that would be owed because the AMT has not 
been patched. They would use form 1040-ES. I bet I will be here 
September 15 when the third payment comes due saying largely the same 
thing.
  Congress does not seem to be under any pressure to actually take 
action. Many on the other side insist that, unlike new spending 
proposals or extensions of existing programs, AMT reform should happen 
only if it is revenue neutral. That means any revenues--I want to put 
quotes around these words--any revenues ``not collected'' through 
reform or repeal of the AMT must be offset by new taxes from somewhere 
else.
  Notice I said ``collected,'' and I did not say ``lost.'' This 
distinction is important for the simple reason that the revenues we do 
not collect as a result of AMT relief are not, in fact, lost to the 
Treasury. The AMT collects revenues it was never supposed to collect in 
the first place. In other words, middle-class income people were not 
supposed to pay this tax in the first place--that is that 24 million--
because this AMT was originally conceived as a mechanism to ensure that 
high-income taxpayers were not able to completely eliminate their tax 
liability. From that standpoint, even the AMT has failed because in 
2004, IRS Commissioner Everson told the Finance Committee the same 
percentage of taxpayers continue to pay no Federal income tax as they 
did back in 1969. Even I think, on raw numbers, it is a much larger 
number. Back then it was only 155 taxpayers.
  Today, at least 24 million to 26 million middle-class families are in 
these alternative minimum tax crosshairs. That is quite a change from 
the 155 rich people in 1969 who were not paying any tax, the reason for 
the alternative minimum tax to be passed in the first place.
  Finally, if we offset revenues not collected as a result of AMT 
repeal or reform, total Federal revenues over the long term are 
projected to push through the 30-year historical average and then keep 
going.
  The AMT then is a completely failed policy that is projected to bring 
in future revenues that it was never designed to collect in the first 
place.
  President Obama met those of us who favor repeal partway by staking 
out a position on AMT reform during his 2008 campaign. His position 
provided for a permanent AMT patch. His budgets have maintained that 
position.
  While permanent repeal without offsetting is the best option, we 
absolutely must do something to protect taxpayers and do it now, even 
if it involves a temporary solution, such as an increase in the 
exemption amount.
  Of course, if we do that, we are going to be in the same fix next 
year, and I will be making that same point again.
  Today, Tuesday, June 15, 2010, taxpayers making quarterly payments 
are going to once again discover that the AMT is neither the subject of 
an academic seminar nor a future problem that we can put off dealing 
with. The AMT is a real problem right now, and if this Congress is 
serious about tax fairness, it needs to stand up and take action.


                              Job Creation

  Mr. President, I wish to address the Senate for a minute on another 
issue about how many jobs the stimulus bill created.
  In recent weeks, a number of my colleagues have come to the floor to 
proclaim the success of the massive $862 billion stimulus bill Congress 
enacted in 2009. Although the number of private sector jobs has 
increased by only about half a million since 2009, they continue to 
insist the stimulus bill has created millions of new jobs. How do they 
justify these claims?
  The stimulus bill requires certain recipients of stimulus funds to 
report the number of jobs they have created or saved or, more 
accurately, they report the number of jobs funded with the stimulus 
dollars.
  The stimulus bill also requires the Congressional Budget Office to 
issue a quarterly report on these numbers. The Congressional Budget 
Office is careful to point out that the number of jobs being reported 
by stimulus recipients is not a comprehensive estimate of the economic 
impact of the stimulus bill. According to the Congressional Budget 
Office, the actual numbers could be higher or lower.
  According to CBO ``estimating the law's overall effects on employment 
requires a more comprehensive analysis than the recipients' reports 
provide.''
  For this analysis, CBO relies on a computer model. In other words, 
CBO does not look at the actual jobs data. Instead, it looks at a model 
of the economy.
  CBO is very upfront about all of this. CBO used a computer model to 
predict how many jobs the stimulus bill would create before it was 
enacted into law. Now the stimulus bill is, in fact, law, and CBO is 
using a computer model to tell us it did just what they said it would 
do--create jobs.
  Why would CBO rely on a model instead of actual data? According to 
CBO--and I have a three- or four-sentence quote here:

       Data on actual output and employment are not as helpful in 
     determining the stimulus bill's economic effects because 
     isolating those effects would require knowing what path the 
     economy would have taken in the absence of the law. Because 
     that path cannot be observed, there is no way to be certain 
     about how the economy would have performed if the legislation 
     had not been enacted.

  My judgment is that CBO is saying this: CBO doesn't know how much 
better or worse the economy would have been if the stimulus bill had 
not been enacted. That means the Congressional Budget Office also 
doesn't know how much better or worse the economy is now as a result of 
the stimulus bill. So basically CBO is saying: Trust us--or more 
specifically: Trust our model. But if the model was wrong to begin 
with, then wouldn't it still be wrong? According to the Congressional 
Budget

[[Page 10640]]

Office, their model relies on historical relationships to determine 
estimated multipliers for each of several categories of spending and 
tax provisions in the stimulus bill. The problem is that there is no 
way to know whether these historical relationships remain constant over 
time or whether they change under different economic circumstances.
  In short, the jobs numbers attributed to the stimulus bill are based 
on assumptions which may or may not have any basis in reality.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.

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