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WASHINGTON-In a speech on the Senate floor today, U.S. Sen. John Cornyn, a member of the Senate Budget Committee, called for immediate reforms to the Alternative Minimum Tax (AMT), which, if not addressed, will lead to higher taxes and longer tax return delays for millions of Texas families. The Senate tomorrow is expected to consider AMT legislation introduced by congressional Democrats that provides temporary relief but which pays for this relief by passing multi-billion tax increases in other areas, such as small business growth.
"As a result of the inaction of the majority, the so-called Alternative Minimum Tax is going to take place unless we find a way to work our way through this issue without a tremendous tax increase on other hard-working Americans. But if there were ever a misnomer on a tax, this would be it because for an increasing number of Americans, the Alternative Minimum Tax is neither alternative nor is it minimum.
"Congress, it should be remembered, created the AMT almost 40 years ago in response to the Secretary of the Treasury's testimony that 155 taxpayers paid zero federal income tax on their 1967 tax returns. Unfortunately, but, I guess, predictably, this tax has now grown to cover roughly six million taxpayers today and will grow to 23 million taxpayers next year...unless Congress acts. This is because, unlike the regular income tax, the AMT is not indexed for inflation. This means that over time, economic growth and inflation have caused a steady increase in the number of middle-income taxpayers who will get hit by the AMT.
"Further, at a time when many us are raising concerns regarding the competitiveness of U.S. capital markets and pointing out that our economic competitors are doing everything they can to emulate the success of our capital markets, the last thing we should want it do is to put the United States at a disadvantage by increasing taxes on capital formation and driving investment dollars to other markets.
"Instead of figuring out ways to keep the hands of Washington bureaucrats in the pockets of taxpayers, this Congress ought to do all it can to protect millions of middle-class taxpayers from a tax that no one expected them to have to pay in the first place. Taxpayers already work four months of the year to pay local, state and federal taxes. This is real money to real Americans and the political games surrounding it ought to end. The Majority should not use AMT relief as a hostage to be exchanged for their tax-and-spend policies. Taxpayers cannot afford it. Neither can the American economy."