Thousands of Georgia Families Spared Higher Taxes Under Alternative Minimum Tax (AMT)

On December 19, 2007, the House of Representatives passed the Tax Increase Prevention Act of 2007, legislation providing immediate tax relief to millions of families who would otherwise pay higher taxes under the alternative minimum tax (AMT) this year.  More than 500,000 families in Georgia and more than 45,000 taxpayers in the 5th District are estimated to benefit from lower taxes under this bill.

Approximately 23 million American taxpayers would have paid a total of about $50 billion in additional taxes if this AMT legislation was not passed. 

The Alternative Minimum Tax (AMT) was designed in 1969 to ensure that a couple hundred extremely wealthy individuals couldn’t take advantage of deductions and rules to avoid paying taxes altogether.  Individuals must determine their tax liability once under the standard tax code, a second time following the rules under the AMT, and pay whichever is larger.  When the tax was created in 1969 it was not indexed for inflation; therefore, it is now impacting a growing number of taxpayers that the AMT was never intended to hit.  Without this legislation, the AMT would impact people making $50,000 per year.  That was not the intent and we acted to protect 23 million taxpayers from being hit. 

Unfortunately, the cost of preventing this tax increase is $50 billion, and that cost will now be added to the national debt due to Republican objections over paying for AMT tax relief.  Every time we add to the national debt, we are asking our children and grandchildren to pay the bill.  I supported closing loopholes to cover the cost, including a provision that would have prevented a super-wealthy class of hedge fund investment managers from using offshore tax haven corporations to defer taxes on compensation they receive.  This fiscally responsible approach was blocked by Republicans, who chose to side with the wealthy and focused on one side of the ledger, calling our effort to close tax loopholes for rich investors a tax increase.  When you look at the numbers under the Democrats’ plan it becomes hard to believe the President and his supporters labeled that effort a tax increase.

It is important that families will now avoid a higher tax bill, but unfortunately the obstruction of the minority party prevented Democrats from passing a more responsible bill.  Closing tax loopholes for the super-rich would have offset the cost of this tax relief and kept the debt lower.  The larger the debt grows, the more difficult it will be to address urgent issues like reforming Medicare, Medicaid, and Social Security so they are on stronger financial footing for future generations.