December 05,2007

Grassley Addresses AMT Status, Reasons for Delay, Consequences of Inaction

I am pleased that we are finally discussing solutions to the Alternative Minimum Tax problem that is poised to swallow 19 million more tax filers this year. I would have rather gone through this process several months ago, but better late than never. Over the course of the year, I have given many speeches analyzing the AMT, and describing the problem it poses for middle-class taxpayers in great detail. On February 12 I gave a speech on the history of the AMT. On February 13 I highlighted how the AMT affects individual income tax liabilities. On February 15 I discussed ways to reform the AMT and made the case that complete repeal was the best way to deal with the AMT.

Incidentally, I made the case that dealing with the AMT one year at a time could be problematic, and current events have proved me right. On March 20 I pointed out that the Democrats’ budget had no room for AMT relief; not even one year. On March 22, I explained why we need to repeal the AMT. On April 18, I made an appeal for quick action on the AMT to help taxpayers making estimated payments, who were already paying the price for a lack of action in Congress. On May 14, I explained why AMT relief or repeal should not be paid for with a tax increase someplace else. On May 17, I criticized the conference report for the FY 2008 budget resolution for not realistically addressing the AMT problem. On that same day, I gave another speech exposing how Democratic offsets to AMT relief would result in massive tax increases.

On June 13, I discussed the inadequacy of the lead trial balloons House Democrats were floating as possible fixes for the AMT. This was to make the occasion of second quarter estimated tax payments coming due. On July 24, I introduced legislation to protect taxpayers who should have been making estimated tax payments for 2007 but weren’t because they did not realize Congress was failing to protect them from the AMT. On September 19, I marked the occasion of third quarter estimated tax payments coming due by again dissecting the AMT problem and how little Congressional leadership was doing about it.

I just cited 12 speeches delivered on the Senate floor over the past year. That doesn’t even include press conferences, Finance Committee meetings, and other events where I have talked about the AMT. I have been talking about the AMT literally all year, and House Democrats finally managed to introduce a bill on October 30, and the Majority Leader turned to it here in the Senate right before the Thanksgiving recess. Democratic leadership cannot blame Republicans for their own failure to act until almost literally the last minute. As I said, I am glad that we are finally discussing solutions, and Senate leadership seems to realize that AMT should not be offset. I also want to thank my good friend Chairman Baucus for all of his hard work this year, and for several years, to protect middle- class taxpayers from the AMT. Chairman Baucus is doing our country a great service now by trying to work out a compromise between those who want to pay for AMT relief and extenders with a tax increase, and those who are opposed to tax increases. He has consistently avoided bitter partisanship and always works to do the right thing. Those obsessed with paygo, who want to raise more taxes to pay for a tax that was never mean to raise revenue, are punishing the America taxpayer for their obsession.

Unfortunately, right now I can not support a package with roughly $45billion in offsets for extenders even though AMT relief is not offset. I am still reviewing some of the revenue raisers, but my issue is not with the raisers themselves. Of course, I will only support a raiser if I think it is good policy, and will not support a raiser simply for the revenues. I am concerned that if we send this package to the House, they will try to use the offsets to pay for AMT relief. The House has shown that it does not respect the need to get 60 votes in the Senate, and I do not expect that to change right now. If the majority leader is serious about reaching a compromise and really respects the minority, as he claims, he needs to get his colleagues in the House on board. I have been around long enough not to make it too easy to stab me in the back.

It is unfortunate that congressional leadership took so long to deal with AMT, and that some are still putting an obsession with paygo and narrow partisan interests over the well being of their own constituents. We can talk until we’re blue in the face. The bottom line is we need to change the tax law with respect to the AMT. That law change needs congressional action and a Presidential signature. Anything else is just talk.

Mr. President, I’d like to end with a suggestion that I hope will get all parties to an agreement on changing the low on the AMT patch. By all parties, I’m referring to House Democrats, House Republicans, Senate Democrats, Senate Republicans, and, of course, the President. Without an agreement we won’t get a law. Without a law change, 23 million families face an unexpected tax increase of at least $2,000 per family. Without a law change, we make worse the filing season fiasco for another 27 million families and individual taxpayers.

Here’s my suggestion. It is simple and it is in black and white. It is in a letter from Chairmen Rangel and Baucus and Ranking Republicans McCrery and myself. We are the senior tax-writing committee members from the Congress. That letter dated, October 31, 2007, assured Treasury Secretary Paulson and Acting IRS Commissioner Stiff that we would work to pass an AMT patch bill expeditiously. I ask unanimous consent that a copy of the letter be inserted in the record. That letter contains the test that ought to be applied to any proposal in substance or process on the AMT patch legislation. Here’s what the sentence says:

“We plan to do everything possible to enact AMT relief legislation in a form mutually agreeable to the Congress and the President before the end of the year.”

Chairmen Rangel and Baucus and their ranking members made it clear in the letter. Now, our leaders in both the House and the Senate need to back up their tax writers. We Senators need to
pass a package that is agreeable to the President and the House. What do we all agree on? We agree the patch needs to get done. So, that is the base of what should pass the Senate if we’re to get a law enacted. House and Senate Democrats insist on offsets for the patch.

The President and Congressional Republicans disagree. Offsets for the patch are not mutually agreeable. They fail the tax writers test. On extenders, the House wants one year. Senate wants two years. President Bush had one year in his budget. Maybe two years might be mutually agreeable. On this point, offsets are not mutually agreeable. So, it looks to me like the path is clear. We need to make law. To make law, the proposal must be mutually agreeable. The only proposal that is mutually agreeable is an un-offset AMT patch. An un-offset extenders package may be mutually agreeable. Let’s get to the law change and end the AMT patch dilemma. I yield the floor.

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