Outside editorial: Fix the broken tax

Posted: Thursday, April 12, 2007

This editorial appeared in The Fresno (Calif.) Bee:

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It's time to reform the federal alternative minimum tax, which no longer limits its reach to millionaires who use loopholes to skip out on their fair share of taxes. Now the AMT snags many middle-class taxpayers because it was never indexed to inflation.

House Democratic leaders say they intend to permanently shield the middle class from the alternative minimum tax. We hope that effort is successful because this unfair tax could catch millions of American families as early as next year.

This should be an issue that Democrats and Republicans can agree on. It's not about giving someone a tax break, but ensuring that all taxpayers get fair treatment.

Republicans, including President Bush, say the AMT needs reforming, but they haven't been able to push a permanent fix through Congress. The GOP, when it controlled Congress, blocked expansion of the tax through temporary fixes. But even then, too many people were unfairly paying the tax.

The New York Times reported that the tax can snare people with incomes as low as $50,000. If it's not reformed this year, it could hit 23 million households when they file their 2007 taxes next year. The tax has a disproportionate effect on states with higher average incomes and high state and local taxes, such as California and New York.

The biggest problem for reformers is how to replace the AMT funds intended for the federal treasury. Congress could cut spending - an unlikely option - or shift the burden to other taxpayers. But making the reform as revenue-neutral as possible can be worked out during the legislative process.

It's time to reform the alternative minimum tax so it impacts only those it was originally intended for. This hidden tax is being paid by too many hard-working Americans who don't use the tax code to dodge their tax burden.

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