Alternative Minimum Shaft04 May 2004
The CBPP has a great piece detailing the latest joke of legislation coming from the House in order to address the AMT… for a year:
The House legislation is reported to cost $17 billion, which may make it sound modest. But the House approach of extending AMT relief for just one year does not reduce the long-term cost of such relief. The long-term cost of AMT relief remains the same, whether done all at once or in ten one-year increments. So while the $17 billion price tag may create the illusion of a low cost, Congressional Budget Office estimates show that AMT relief similar to the proposal in the House bill would cost $376 billion over ten years.1 That is 22 times the cost of the one-year measure coming to the House floor.
So why only spend $17 billion for a year on something that will inevitably cost $376 billion?
Keeping AMT relief temporary, along with the other gimmicks employed in the 2001 and 2003 tax-cut measures such as slow phase-ins and artificial sunsets, caused the official cost estimates of the 2001 and 2003 tax cuts to vastly underestimate the true budgetary impact of those measures. House Ways and Means Committee Chairman Bill Thomas, the chief Republican tax-writer in the House, acknowledged in 2001 that these gimmicks allowed more tax cuts to be crammed into the 2001 bill, likening it to “putting a pound and a half of sugar into a one pound bag.” After passage of the 2003 tax bill – which was officially estimated to cost $350 billion – House Speaker Dennis Hastert frankly admitted that the cost estimate had been gamed. He said, “The $350 [billion] number takes us through the next two years, basically. But also it could end up being a trillion-dollar bill, because this stuff is extendable.”
That is: politics. Read the “The Growing Reach of the AMT” for a good capsule summary of what the AMT is, if you are confused. Now, what I want to know is: who is the genius that thought it was a good idea to propose the AMT legislation without indexing for inflation?